Multiple modifications to Social Security have been implemented this year, affecting approximately 68 million individuals who rely on Social Security benefits. These alterations include some positive developments for recipients—particularly beneficial for those potentially facing financial shortages. retirement savings .
The purpose of the cost-of-living adjustment (COLA) is to ensure that Social Security benefits align with inflation, allowing recipients to preserve their ability to buy goods and services even as expenses increase. The benefits have gone up by 2.5%. As of January, based on data from the Social Security Administration (SSA), which increases retirement benefits by approximately an average of roughly $50 each month .
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This rise is somewhat smaller than the previous one. present yearly inflation rate of 3% , which has continued cooling since reaching peak levels in 2022.
For instance, in 2024, the Cost of Living Adjustment (COLA) was established at 3.2%, whereas in 2023—amidst high inflation—it surged to an impressive 8.7%. Consequently, although this year's COLA is significantly less, it aligns with a decrease in inflation rates.
The highest possible benefit for individuals retiring at their full retirement age (FRA) has gone up as well, potentially leading to larger monthly payments. For the year 2024, this change means that maximum benefit was $3,822. This year, the maximum benefit amounts to $4,018—and for someone, it could go up to $5,108. waits until they reach the age of 70 to claim their benefits.
However, these are not the sole modifications. Below is crucial information regarding the alterations and the three key segments that will be affected.
1. U.S. citizens nearing retirement age
One major change for individuals approaching retirement is an extension of two months. FRA For those born in 1959, the Full Retirement Age (FRA) has gradually risen since 1983 after Congress raised it from 65 to 67.
This year, individuals who reach 66 years old will need to wait ten months before receiving their full benefits, making November 2025 the soonest eligibility date. You still have the option to apply for your benefits earlier though. as young as 62 years old , you'll face a lasting reduction in the sum of your monthly payment — potentially around 30%.
Next year, the ceiling for taxable wages will rise from $168,600 in 2024 to $176,100. Consequently, those with greater incomes will notice a larger portion of their salary being allocated towards Social Security taxes; however, this adjustment aims at bolstering Social Security funds, as forecasts predict potential shortfalls. partially depleted by 2037 unless changes are made.
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2. U.S. citizens receiving disability or veterans' benefits
Individuals in America facing disabilities or health issues that hinder their capacity to work might experience an increase in their Social Security Disability Insurance (SSDI) payments. This program is intended to assist those who are primarily incapable of working due to such challenges.
As long as your income doesn't exceed the "substantial gainful activity" limit, you can continue earning money and receiving SSDI benefits. This rule applies according to the guidelines. SSA .
By 2025, this limit will increase by $70 to $1,620 per month for the majority of recipients, whereas an individual who is legally blind and receives SSDI benefits can earn as much as $2,700 monthly.
Veterans can expect a boost in their VA disability compensation by 2.5% due to the Cost of Living Adjustment (COLA). The same raise at 2.5% will apply to surviving spouses who receive dependency and indemnity compensation benefits.
Additionally, there could be boosts in payment levels and expanded coverage for new areas. presumptive conditions , potentially enabling several veterans to become eligible for benefits they previously did not qualify for.
3. Americans who are employed while receiving their benefits
For senior citizens in the U.S. receiving Social Security benefits while still working—whether through part-time jobs or gigs to add extra income—the government sets a limit on earnings. If this threshold is exceeded, the SSA will reduce some of these benefits. The same rule applies to individuals below Full Retirement Age (FRA) who collect survivors' benefits and continue to work.
The positive development for individuals attaining their Full Retirement Age this year is that the earnings test limit It has risen to $62,160 in 2025 (previously at $59,520 last year). Once your earnings surpass this level, the Social Security Administration deducts $1 for each $3 earned. Should you be several years shy of Full Retirement Age, they will withhold $1 for every $2 over the limit of $23,400 (an increase from $22,320 in 2024).
Luckily, the earnings test limit doesn’t apply during the month when you attain your full retirement age. This implies that regardless of your income level, there will be no reduction in benefits.
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The content of this article serves solely as information and should not be interpreted as advice. It comes with no guarantee or warranty whatsoever.
