Americans will see five changes to Social Security and millions will now score 2.5% payment bump this month
For millions of Americans, Social Security is changing as the new year begins.
In 2025, you should be aware of five improvements that could put extra money in your pocket.
The first is the annual cost of living adjustment (COLA), which has begun to take effect and causes beneficiaries to receive a 2.5% increase.
This implies that during the course of the following 12 months, 72.5 million Americans will see an increase in their social security (SS) benefits.
The first payment for those who receive Supplemental Security Income (SSI) will have already been made.
It was supposed to be paid on January 1st, but on December 31st, it arrived a day early owing to the holidays.
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SSI’s 2025 maximum level has increased from $943 to $967.
Despite the increase, COLA is at its lowest level since 2022, when it was 8.7%.
RETIREMENT AGE CHANGES
This year, the full retirement age (FRA) for Americans born in 1959 is 66 and 10 months.
It is advisable to wait until FRA before filing a claim, as early filing could result in a 30% reduction in benefits.
Although payments are lowered to 70%, people can still make claims starting at age 62 if they so choose or need to.
You will receive the largest Social Security payment if you wait until you are 70 years old; but, you will not receive any additional benefits if you wait any longer.
For people born in 1960 and after, the FRA increases to 67 years starting in 2026.
CHANGES TO MAXIMUM EARNINGS
Because the earnings cap has increased this year, you will be marginally better off if you work while claiming and are covered by the FRA.
Those under full retirement age who earn more than $23,400 in 2025 will lose $1 for every $2 over the cap; in 2024, the cap was $22,320.
Your FRA was $59,520 last year; if it drops to $62,160 in 2025, you should be able to make $62,160 before losing $1 for every $3 over the limit.
2025 Social Security Payment Schedule
The second, third, and fourth Wednesdays of every month are when Social Security benefits are distributed. Benefits will be disbursed on the following dates in 2025:
- January 8, 15, and 22
- February 12, 19, and 26
- March 12, 19, and 26
- April 9, 16, and 23
- May 14, 21, and 28
- June 11, 18, and 25
- July 9, 16, and 23
- August 13, 20, and 27
- September 10, 17, and 24
- October 8, 15, and 22
- November 12, 19, and 26
- December 10, 17, and 24
The Social Security Administration states that this only applies to the months prior to your reaching FRA.
Since no money is withheld until you attain FRA, there are no penalties.
INCREASE IN LIMIT FOR PAYROLL TAXES
Americans will now pay taxes on the first $176,100 of wages, up from a $168,600 cap last year, due to an increase in the taxable wage base.
However, since most people currently pay Social Security taxes on all of their income, it is unlikely to have a significant impact on many.
Contributions from workers in the highest income tiers, meanwhile, might rise by about $500 annually.
The number increases to nearly $900 annually for high-earning self-employed individuals.
SOCIAL SECURITY CREDITS
Last but not least, modifications to Social Security credit may require workers to earn more in order to qualify for them.
Currently, one credit will “cost” $1,810 in earnings, as opposed to $1,730 in 2024.
People can only earn up to four credits annually, and they must earn at least 40 credits to be eligible for retirement benefits.
The Social Security Administration states that credits are determined by the total amount of wages and self-employment income earned during the year.
Therefore, in order to receive their four credits for 2025, Americans will need to earn $7,240.
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