Major Social Security Shifts Coming in 2025: What You Need to Know!
As we gear up for 2025, it’s time to get serious about your financial goals. While you’re crafting that to-do list, don’t forget to pay attention to the upcoming changes in Social Security. Whether you’re still in the workforce or enjoying your golden years, these updates could have a significant impact on your finances.
To help you navigate these changes, I’ve spotlighted three major alterations announced by the Social Security Administration (SSA) that you need to know about.
Let’s dive into one of the most awaited updates—the annual cost-of-living adjustment (COLA). This adjustment is crucial for beneficiaries to maintain their purchasing power as inflation ebbs and flows.
In 2023, we experienced a hefty 8.7% COLA, followed by a more modest 3.2% increase in 2024. For 2025, expect an even smaller bump of 2.5%—the tiniest since 2021. Still, it aligns with the decade’s average of 2.6%.
So, what does this mean for your budget? On average, Social Security retirement benefits will increase by roughly $50 per month starting January 2025. However, taking Medicare Part B payments into account, your net gain might be less than anticipated.
While many look forward to this annual COLA, the upcoming increase isn’t exactly a financial windfall. In fact, a recent survey found that 54% of retirees believe the 2025 COLA won’t keep pace with essential costs.
On the upside, a smaller adjustment signifies that inflation is cooling, even if prices are still on the rise—not as sharply as in 2022 and 2023.
Are you working while receiving Social Security? You’re in good company.
With an average Social Security check of $1,925.46 as of November 2024, it’s no surprise that many retirees struggle to meet their financial obligations if that’s their sole income. In fact, many are considering re-entering the workforce, according to the earlier survey.
Keep in mind, if you’re collecting benefits while working, there are limits on how much you can earn before your benefits are affected. One limit applies if you take Social Security before your full retirement age (FRA), which is 67 for those born in 1960 or later. A different limit kicks in once you reach FRA in 2025.
Here’s the exciting part: the earnings limits are increasing in 2025, allowing you to earn more before your benefits are reduced. Check out the details:
