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Millions of Social Security recipients will benefit from a 2.5% cost-of-living adjustment for 2025 that is scheduled to take effect in January.
The increase would jump the maximum Social Security benefits for workers retiring at full retirement age to $4,018 per month from $3,822 this year. Social Security Administration.
But those maximum benefits will increase by $196 a month, while retirement benefits will increase by about $50 a month on average, the agency said.
The average monthly benefit for retired workers is expected to increase to $1,976 per month in 2025, an increase of $49 from $1,927 per month as of this year, according to the Social Security Administration.
Who can receive the maximum Social Security benefits?
The highest Social Security benefits generally go to people who have earned the most over their working careers, said Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities.
That group usually includes “a very small number of people,” he said.
Social Security retirement benefits are calculated based on 35 years of highest earnings, so workers must always earn up to that threshold to get the maximum retirement benefits.
“Very few people start winning at the highest level at the age of 21,” Van de Water said.
Workers contribute payroll taxes to social security up to a so-called tax cap.
In 2024, a 6.2% tax paid by both workers and employers (12.4% for self-employed workers) applies to income up to $168,600. In 2025, that rises to $176,100.
Specifically, this limitation applies only to wages that are subject to federal payroll taxes. Jim Blair, a former Social Security executive and vice president at Premier Social Security Consulting, said that if wealthy people have other sources of income, such as investments, that don't require them to contribute payroll taxes, that can be a nuisance to their Social Security benefits. He said it would not affect the scale. admin.
How can I increase my Social Security benefits?
Prime Minister Tony Blair said some recipients receive Social Security checks of more than $4,000 a month, and they typically wait until they are 70 to claim them.
“Technically speaking, you will receive the most Social Security benefits if you wait until you are 70,” Blair said.
By claiming retirement benefits at the earliest possible age (age 62), beneficiaries receive permanently reduced benefits.
At full retirement age (age 66 or 67, depending on date of birth), retirees receive 100% of their previously earned benefits.
Beneficiaries will then be able to collect benefits by waiting from full retirement age until age 70. 8% benefit boost Year by year.
By waiting from age 62 to age 70, beneficiaries could see their benefits increase by 77%.
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But because everyone's circumstances are different, it doesn't always make sense to wait until the maximum age you can apply, Blair said.
He said potential beneficiaries need to assess how the decision to apply will not only affect them personally, but also how it will affect their spouses and dependents.
Mr Blair said: “You need to look at your situation before you apply.”
He also said it's important for prospective recipients to create an online My Social Security account to view their benefit statements. This will show you an estimate of future profits and the revenue history the agency has on record.
That earnings information is used to calculate benefits, so individuals should double-check that the information is correct, Blair said. If not, you'll need to contact the Social Security Administration to fix it.
