These 2 Social Security changes in 2025 could put more money in retirees’ pockets

Social Security is a key source of income for millions of retired Americans today. But even though the program has been around for decades, it tends to undergo changes from year to year. And some of these changes are positive in nature that can improve retirees’ finances.

In 2025, Social Security is expected to go through two major changes that could result in more financial room for you. Here’s what to expect in January.

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1. A higher monthly benefit

Each year, Social Security benefits are eligible for a cost-of-living adjustment (COLA). The purpose of the COLA is to help ensure that seniors can maintain their purchasing power as inflation increases prices over time.

In 2024, Social Security recipients saw their benefits increase by 3.2 percent. But inflation cooled to a very large extent in 2024 compared to 2023. Because of this, the 2025 Social Security COLA is not expected to be as high as the 2024 one.

We won’t know exactly what the 2025 Social Security COLA will look like until October 10th. That’s because this number is based specifically on third-quarter inflation readings. Since September is not over, it is too early to have those dates.

Recent estimates, however, put the 2025 COLA at 2.5%. While this number could change slightly (either up or down), at this point, it’s fair to assume that Social Security benefits will increase somewhat in the new year.

Note that although Social Security benefits are eligible for an annual COLA, those monthly payments could remain the same if there is no increase in inflation. But that’s unlikely to be the case in 2025, which means you should expect some sort of increase in monthly checks.

If you’re disappointed by that initial 2.5% estimate, you realize that what you’ll lose in the form of a lower COLA, you’ll gain in the form of less rampant inflation.

2. A higher limit for the earnings test

Seniors receiving Social Security benefits are allowed to earn money from a job at the same time. Once you reach full retirement age, you can earn any amount of salary without that money negatively affecting your Social Security payments.

However, if you work and receive Social Security before full retirement age, you are subject to a means-tested limit. Exceeding this limit generally results in some of your benefits being withheld.

This year the earnings test limits are $22,320 for those who do not reach full retirement in 2024 and $59,520 for those who do i am reaching full retirement age in 2024. In 2025, these limits are likely to increase with inflation. But as is the case with next year’s COLA, we won’t have an official number until October 10th.

Get ready for positive news

If you rely on Social Security to make ends meet, you know that things will probably get better in 2025. Not only should your monthly payments increase, but you should have the option to earn more money in the new year without risk withholding of benefits. It’s worth checking out the Social Security Administration’s website on October 10 to learn more about the positive changes coming down the line.