These 2 Social Security Changes in 2025 Could Put More Money in Retirees’ Pockets

According to The Motley Fool, Social Security is a vital income source for millions of retired Americans today. Despite being a long-standing program, it undergoes annual changes that can have positive impacts on retirees’ finances. In 2025, Social Security is set to experience two significant shifts that could provide more financial relief. Here’s what you can expect come January.

1. A Higher Monthly Benefit

Every year, Social Security benefits are eligible for a cost-of-living adjustment (COLA), designed to help seniors maintain their purchasing power as inflation increases prices over time. In 2024, recipients experienced a 3.2% boost in their benefits. However, inflation has significantly cooled in 2024 compared to 2023, leading to expectations that 2025’s COLA may not be as substantial.

The exact percentage for 2025’s COLA will be revealed on October 10 when the Social Security Administration (SSA) announces the third-quarter inflation readings. Preliminary estimates suggest that the COLA could be around 2.5%. While this figure may fluctuate slightly, it’s reasonable to anticipate some increase in Social Security benefits for the new year.

It’s important to note that while benefits are eligible for an annual COLA, monthly payments could remain unchanged if inflation does not rise. However, given current trends, it’s unlikely that payments will stay flat in 2025, so beneficiaries should prepare for an increase.

If you find the initial 2.5% estimate disappointing, consider that a smaller COLA paired with lower inflation is a positive trade-off for your overall financial situation.

2. A Higher Earnings-Test Limit

Seniors receiving Social Security benefits can earn income from a job, but there are rules regarding how much they can earn without negatively impacting their benefits. Once you reach your full retirement age, you can earn any amount without affecting your Social Security payments. However, if you’re working and collecting benefits before reaching full retirement age, you must adhere to an earnings-test limit. Exceeding this limit typically results in some benefits being withheld.

Also read: Millions of Retirees to Receive New Social Security Benefit Increase – Full Support Confirmed

In 2024, the earnings-test limits are set at $22,320 for those not reaching full retirement age and $59,520 for those who are. In 2025, these limits are expected to rise in line with inflation. The official numbers will be announced on October 10, alongside the COLA announcement.

Prepare for Positive Changes Ahead

If you rely on Social Security to make ends meet, it’s reassuring to know that improvements are likely in 2025. Expect your monthly payments to increase and the potential to earn more without risking benefit withholding. Be sure to check the Social Security Administration’s website on October 10 for updates on these positive changes.

Unlocking Additional Social Security Benefits

Many retirees may not be aware of a potential $22,924 Social Security bonus that could significantly enhance their retirement income. If you feel behind on your retirement savings, exploring these lesser-known “Social Security secrets” can help maximize your benefits. One straightforward strategy could yield an additional $22,924 annually! To discover how to make the most of your Social Security benefits, click here for more information.