The start of a new year is a time of change. By now, many people may be changing jobs, health insurance, and implementing New Year's resolutions they made to improve their lives.
In this context, we must also become familiar with changes that the government makes to tax, retirement, and social security laws. For retirees and workers, some of the most important details to keep an eye on this year are the five Social Security changes listed below.
1. 2.5% Cost of Living Adjustment (COLA)
Technically, the Social Security Administration originally applied the 2.5%. Cost of Living Adjustment (COLA) Until December 2024 benefit. But the Social Security Administration pays benefits the month after they are due, so most recipients will receive their first check for the new amount this month.
When you receive your January check depends on the day of the month you were born.
- Born from 1st to 10th: January 8, 2025
- Born between 11th and 20th: January 15, 2025
- Born between 21st and 31st: January 22, 2025
If you also receive Supplemental Security Income (SSI), you should have already received your first check on December 31, 2024. These benefits are usually paid on the first of the month, unless that day falls on a weekend or holiday. The same goes for New Year's Day.
2. Higher social security labor unit requirements
Workers will need to earn a little more to earn Social Security work credits in 2025. You must earn at least 40 credits to qualify for retirement benefits, and you can only earn a maximum of 4 credits per year.
In 2024, you received 1 credit for every $1,730 you earned. But in 2025, you will need $1,810 in earnings to earn one credit. However, many part-time employees will still be able to earn the $7,240 needed to earn four credits in 2025, so this won't be a big challenge for most workers.
3. Raising the cap on social security payroll taxes
Some workers could lose even more money in Social Security payroll taxes in 2025 because the taxable wage base has increased. In 2024, you only paid these taxes on the first $168,600 of earnings. But in 2025, you will owe them the first $176,100 you earned.
This isn't a big problem since most of us already pay Social Security taxes on all our income. But high-income earners could end up paying an additional $465 a year in taxes if they're traditionally employed and $930 a year if they're self-employed.
4. Higher Earnings Test Limitations
Retirees who work while claiming Social Security Full retirement age (FRA) In 2025, they will be able to earn a little more before the government withholds money from their checks. People at FRA and above don't have to worry about their money being withheld, regardless of their annual income.
In 2024, people under FRA lost $1 for every $2 they earned over $22,320 during the year. Those who reached FRA in 2024 would only lose $1 for every $3 earned above $59,520 if they had earned that much before their birthday. In 2025, these limits increase to $23,400 and $62,160, respectively.
5. Full retirement age is higher for those born in 1959 compared to those born in 1958.
People born in 1959 will reach full retirement age of 66 years and 10 months this year. The retirement age has been gradually raised over the past few years, and the full retirement age will finally stop next year when people born after 1960 turn 67.
You're free to claim as early as age 62, regardless of your FRA. However, if you claim under FRA, your check can be reduced by up to 30%. The important thing is Weigh all your options Before you insist on avoiding shortages unless you have serious health or financial problems that make delaying impossible.
The Social Security changes listed above are new for 2025, but they are also common changes that occur every year. Whether you're working or claiming social security, it's important to keep the relevant rules in mind for the future, as they will be applicable again from 2026 onwards.
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