Personal Finance

Social Security 2025: 4 Things That Are Changing This January

Maurie Backman

Published: January 6, 2025 12:28 pm

Now that 2025 is underway, a lot of people are slowly but surely getting back into the swing of things. And part of that means getting their finances in order, whether by assessing their debt or working to boost their savings.

Key Points from 24/7 Wall St.

• Social Security benefits are rising, and so are taxes on wages.
• Seniors will be able to earn more money before having benefits withheld.
• It will take more earnings to qualify for Social Security credits.
• It’s never too early or late to start planning for retirement. Click here now to see if you’re ahead, or behind. (Sponsor)

The start of a new year is also a good time to see what’s changing with Social Security. Now you may be thinking, “Why should I care if I’m not retired?” But as you’ll see in a minute, Social Security is changing this year in a way that could impact you tremendously even if you’ve only first started working.

Without further ado, here are four changes to know about.

1. Benefits are going up

Social Security benefits are eligible for an annual cost-of-living adjustment (COLA) that happens automatically based on inflation. A 2.5% COLA arrives this month, which will raise the average monthly benefit from $1,927 to $1,976.

However, that increase does not account for an increase in Medicare Part B’s standard monthly premium, which will impact enrollees in both Social Security and Medicare. That increase will cost Social Security recipients about $10, resulting in a smaller COLA this January.

2. The wage cap is rising

Social Security gets most of its funding through payroll taxes. In 2025, workers have to pay into the program on their first $176,100 of income, up from $168,600 in 2024.

Those who are self-employed pay 12.4% of $176,100 into Social Security. Meanwhile, workers with employers split that burden with the companies that pay their salaries.

3. The earnings-test threshold is rising

It’s allowable to work and collect Social Security at the same time. Once you’ve reached full retirement age (FRA), you’re not subject to an earnings-test limit. This means you can earn any amount of money without seeing your monthly benefits shrink.

Before FRA, you do need to be mindful of how much income you’re being paid from a job. The good news, though, is that in 2025, the earnings-test limit is higher than it was in 2024.

This year, you can earn up to $23,400 without having benefits withheld, up from $22,320 in 2024. And if you’re reaching FRA in 2025, the earnings-test limit you’re subject to is $62,160, up from $59,520 last year. These increases make it easier to earn money without having a portion of your Social Security checks held back. But you should know that withheld benefits aren’t lost forever. You get that money back once FRA arrives.

4. The value of work credits is rising

If you want to collect a monthly Social Security benefit in retirement, you have to earn 40 lifetime work credits at a maximum of four credits per year. In 2025, the value of a work credit is $1,810, up from $1,730 in 2024. This is something to be mindful of if you work very part-time but want to make sure you’ll qualify for Social Security later in life.

That said, there are ways to qualify for Social Security in retirement without ever working at all. You may be able to get paid spousal or survivors benefits if you qualify.