Last week was a big day for Social Security. Not only that Social Security Administration (SSA) announced a cost of living adjustment (COLA), but also revealed details about some other significant adjustments to the program in 2025. If you are currently eligible for the Retirement, Survivors, and Disability Insurance (RSDI) program or Supplemental Security Income (SSI) program, learn more about the 2.5% COLA increase for next year and how it will affect your monthly benefits.

Social Security has officially announced the new cost of living adjustment for 2025

The COLA increase for 2025 was set at 2.5%

Social Security’s official COLA for 2025 is 2.5%, which is significantly lower than the 3.2% COLA that seniors received at the start of 2024. However, it is important to put this COLA in perspective. The lower COLA for 2025 is due to a significant slowdown in inflation in 2024. Seniors continue social security may already receive some relief as costs are not rising as quickly as in previous years.

A new, higher earnings limit is to be set next year

It’s a common misconception that once you start receiving, you have to stop working Social Security Benefits. You can work and receive pension benefits at the same time. However, you must consider the limitations of the program’s earnings test if you do so before full retirement age. The amount of money you can earn from your employment before you risk having part of your Social Security check withheld is called your earning limit. From $22,320 in 2024 to $23,400 in 2025, that’s the difference in the earning limit. From then on, every $2 in wages is at risk of having $1 withheld from Social Security.

In 2025 as you get closer to that full retirement ageyour income test limit will be higher. Then it will rise from $59,520 to $62,160 in 2024. After that, you risk having $1 deducted from Social Security for every $3 of income you earn. However, keep in mind that you do not have to take these numbers into account if you are still working after reaching full retirement age. You have no influence on the amount of your social security benefits.

The earning limit will also change in 2025

Payroll tax is the main source of income for social security. Each year a cap is set that determines how much income must be taxed to finance the program. The maximum salary for Social Security Taxes in 2025 it will be $176,100, an increase from $168,600 in 2024. This development only affects people with higher incomes.

The maximum monthly benefit will be higher

Because there is a wage cap on Social Security taxes, the program only pays a maximum monthly amount. In 2025, the maximum monthly benefit at full retirement age will be $4,018, up from $3,822 in 2024. However, it is possible to receive a monthly paycheck that exceeds the maximum monthly benefit. If you delay submitting your application Entitlement to social security Once you reach full retirement age, your monthly income increases by 8% each year until you reach age 70. A lot has happened with social security in the new year. Whether you receive benefits or not, it is important to keep up with these developments.

Beneficiaries must acquire more work credits

To receive Social Security in retirement, you must pay into the program and earn 40 work credits over your lifetime, up to a maximum of four Work credit per year. In 2025, a work credit will be worth $1,810, up from $1,730 in 2024. This is a number to consider if you work part-time and hope to qualify for retirement benefits in the future. If you work full-time, this step probably won’t affect you, as even at minimum wage you should be making enough to cover your four credits for the year.