Social Security benefits will increase by 2.5% in 2025, according to the annual cost-of-living adjustment (COLA). The average monthly Social Security benefit is set to rise from $1,927 to $1,976 once 2025’s COLA kicks in. For the average retiree, this means about $50 more per month in benefits starting in January.
However, many retirees are not satisfied with this increase. A recent survey found that 54% of respondents aren’t satisfied with their benefits, and 62% have cut back on nonessential items due to inflation. Compared to past COLAs, the 2.5% increase might feel small.
The adjustments were 3.2% in 2024, 8.7% in 2023, and 5.9% in 2022. However, a 2.5% COLA signals that inflation is cooling. If you plan to work while receiving Social Security benefits, there’s good news.
Social Security benefits change for 2025
Social Security’s earnings limits are increasing in 2025. For those who claim Social Security benefits before reaching full retirement age (FRA), the earnings-test limit will increase to $23,400 in 2025, up from $22,320 in 2024.
This means you can earn an extra $1,080 before the Social Security Administration starts withholding $1 from your benefits for every $2 you earn above the limit. If you’ll hit FRA in 2025, the earnings-test limit will be much higher, rising to $62,160 from $59,520 in 2024. Beyond this point, $1 is withheld for every $3 you earn over the limit.
Once you reach FRA, the Social Security earnings test no longer applies. Any benefits withheld due to the earnings test are not lost; you’ll receive higher monthly payments later because those benefits are returned to you. If you’re planning to collect Social Security checks next year, keep these changes in mind.
A little planning today can go a long way toward maximizing your benefits and keeping more money in your pocket.
