Soon enough, you may get some news that rocks your world.
Millions of older Americans today rely on Social Security to cover their senior living expenses. And chances are, you’ll become at least somewhat dependent on those benefits once your career wraps up and your retirement kicks off.
That’s why it’s so important to keep tabs on Social Security. Although the program has been around for many decades, it commonly undergoes changes from one year to the next. And 2025 should be no exception.
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Meanwhile, many of the changes Social Security undergoes are based on shifts in inflation. And come October 10th, the Social Security Administration should be in a position to announce a number of key updates. Here’s what retirees and workers alike should expect to see next month.
1. An official 2025 COLA
Each year, Social Security benefits are eligible for a cost-of-living adjustment (COLA). At the start of 2024, seniors saw their monthly benefits rise by 3.2%. Unfortunately, 2025’s Social Security COLA is shaping up to be lower than 2024’s.
But that’s not a totally bad thing, even though it might seem like it. A smaller COLA is a sure sign that inflation is cooling.
2. The 2025 earnings-test limit
Seniors on Social Security are allowed to earn income from a job while receiving benefits. But if you do so before reaching full retirement age, you’ll be subject to an earnings-test limit. Exceeding that limits results in withheld benefits that are returned to you once you hit full retirement age — but you still have to wait to collect that money.
The earnings-test limit for 2024 is $22,320, or $59,520 for seniors who haven’t reached full retirement age yet but will do so before the year wraps up. Beyond these thresholds, Social Security recipients who work should expect to have some of their benefits withheld. In 2025, the earnings-test is expected to rise, so seniors who receive Social Security and wish to work should get more leeway.
3. The maximum monthly benefit for 2025
In 2024, the maximum monthly Social Security benefit available to workers claiming at full retirement age was $3,822. In 2025, that number should shift upward.
To qualify for Social Security’s maximum monthly benefit, you generally need to earn a high salary throughout your career and work at least 35 years. But you should know that if you delay your Social Security filing past full retirement age, you can boost your monthly benefit even more.
4. The 2025 wage cap for Social Security taxes
Social Security relies on payroll tax revenue to operate. But workers don’t automatically pay Social Security taxes on every dollar they earn. Rather, there’s a wage cap set each year to determine how much income is subject to Social Security taxes.
In 2024, the wage cap is $168,600. Next year, it’s expected to increase in line with inflation, so higher earners should expect to pay more into the program.
Clearly, there will be a lot of Social Security information to unpack on October 10th. You may want to mark that date on your calendar and carve out some time to process these and other changes that are announced on that Thursday.