Social Security won’t just announce a 2025 COLA this week. Here are 2 more big changes to watch out for

It’s the week pensioners have been waiting for. Finally, the Social Security Administration (SSA) is preparing to announce a cost of living adjustment (COLA) in 2025.

And if you’re wondering what’s taking so long, the answer is that the SSA has to wait for September inflation data to become available to arrive at that number. With that data not coming out until October 10th, retirees will be in limbo for a few more days regarding a 2025 COLA.

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But not only next year’s COLA is announced on October 10. The SSA will be able to provide several other key updates on the changes in 2025. Here are two pieces of information you’ll want to keep an eye on.

1. 2025 Earnings Test Limits

A nice feature of Social Security is that you are allowed to earn an income and get benefits at the same time. And once you’ve reached full retirement age, wages from a job won’t affect your monthly benefits (other than maybe in some cases boosting your earnings history and boosting your benefits).

But if you are on social security and earn money from a job before once you reach full retirement age, there is an earnings test limit you will be subject to. And the higher it is, the more freedom you have to earn money before having some of your Social Security income withheld.

Currently, the salary cap is $22,320, or $59,520 for those who are not yet at full retirement age but will reach it before the end of 2024. In 2025, these caps may increase, so it is possible so you can earn more. without risking retained earnings.

And to be clear, retained benefits are not lost. Get your money back at full retirement age. But that doesn’t necessarily help your finances in the short term if full retirement age is still a few years away.

2. The 2025 salary cap

Workers do not necessarily pay social security taxes on all of their earnings. Rather, a salary cap is set each year that dictates how much income is taxed for this purpose.

In 2024, the salary cap is $168,600, so earnings beyond that point are exempt from Social Security taxes (though to be clear, that doesn’t mean higher earnings are exempt from federal and state taxes). For 2025, a higher salary cap will likely be set in line with inflation and wage growth.

Now, if you’re someone who collects Social Security, you might assume that this update isn’t that important to you. But it actually is.

Social Security is facing a revenue crisis that has the potential to lead to benefit cuts within about a decade. A sizeable increase in the Social Security wage cap serves the purpose of pumping more money into the program, which is one piece of the puzzle in the context of avoiding benefit cuts.

There is a lot of hype surrounding the upcoming 2025 Social Security COLA announcement. But realize that there is other key information to be shared on October 10. Visit the SSA website on that day anyway and read the news carefully so you know what to expect in the new year.