Mar 26, 2025
Several changes to Social Security have gone into effect this year, impacting the nearly 68 million people who receive Social Security payments. Some of these changes are great news for beneficiaries — especially those who may be low on retirement savings.
The cost-of-living adjustment (COLA) is aimed at keeping Social Security payments in line with inflation, so beneficiaries can maintain their purchasing power as living costs rise. Benefits have increased by 2.5% as of January, according to the Social Security Administration (SSA), which bumps up retirement benefits by an average of roughly $50 each month.
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This increase is slightly less than the current annual inflation rate of 2.8%, which continues to cool from 2022 highs.
In 2024, for example, the COLA was set at 3.2%, and in 2023 — during a highly inflationary period — the COLA was a whopping 8.7%. So, while this year’s COLA is much lower, it’s in line with a cooling inflationary environment.
The maximum benefit for someone retiring at full retirement age (FRA) has also increased, which could result in a bigger check. In 2024, the maximum benefit was $3,822. This year, the maximum benefit is $4,018 — and this would reach $5,108 for anyone who waits until they turn 70 to claim their benefits.
But these aren’t the only adjustments. Here’s what you need to know about the changes and three major groups that will be impacted.
1. Americans who are about to retire
One of the biggest changes for those about to retire is a two month increase to the FRA for folks born in 1959. The FRA has been creeping upward since 1983, when Congress increased it from 65 to 67.
This year, those turning 66 will have to wait 10 months to receive 100% of their benefit, which means the earliest month to qualify would be November 2025. While you can claim your benefit as early as age 62, you’ll take a permanent decrease in the amount of your monthly check — up to about 30%.
This year we’ll also see an increase in the maximum taxable earnings limit from $168,600 in 2024 to $176,100. For higher earners, this means a bigger chunk of your paycheck will go toward Social Security taxes, though this will help fund Social Security, which is projected to be depleted by 2037 unless changes are made.
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2. Americans who receive disability or veteran benefits
Americans living with a disability or medical condition that impacts their ability to work could see a bump in their Social Security Disability Insurance (SSDI) benefits. SSDI is designed to support Americans who are largely unable to work because of a disability or medical condition.
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You’re still allowed to earn money and collect SSDI, so long as your earnings don’t reach a certain threshold or “substantial gainful activity,” according to the SSA.
In 2025, that threshold has been raised by $70 to $1,620 a month for most beneficiaries, while someone who is legally blind receiving SSDI can earn up to $2,700 a month.
Veterans will also see an increase in their VA disability compensation of 2.5%, thanks to the COLA. This increase also applies to surviving spouses of veterans receiving dependency and indemnity compensation payments.
There’s also the potential for increases in compensation rates and coverage for new presumptive conditions, which could help some veterans qualify for benefits who previously didn’t.
3. Americans who are working while collecting their benefit
For older Americans collecting their Social Security benefit while continuing to work — such as part-time or gig work to bring in a bit of extra cash — there’s a cap on how much you can earn before the SSA starts clawing back some of your benefit. This could also impact anyone who hasn’t yet reached FRA but continues to work while collecting survivor benefits.
The good news for those reaching FRA this year is that the earnings test limit has increased to $62,160 in 2025 (last year, it was $59,520). Above this threshold, the SSA withholds $1 for every $3 you earn. If you’re still a few years away from reaching FRA, you’ll have $1 withheld for every $2 you earn above $23,400 (up from $22,320 in 2024).
Fortunately, the earnings test limit no longer applies in the month that you reach FRA. That means no deduction, no matter how much you earn.
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Vawn Himmelsbach is a veteran journalist who covers tech, business, finance and travel. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, CBC News, Yahoo Finance, MSN, CAA Magazine, Travelweek, Explore Magazine and Consumer Reports.
