Bars

Ch-ch-ch-ch-changes
Turn and face the strange
Ch-ch-changes
Don't want to be a richer man
-- David Bowie

David Bowie might not want to be a richer man, but most of us would like to be richer, and annual Social Security-related changes can help, to a modest degree. Here are some important things to know about Social Security changes for 2025.

A middle-aged person in a blue jacket is looking at the camera with a slight smile.

Image source: Getty Images.

1. Social Security benefits are increasing -- via a COLA

A particularly wonderful thing about Social Security is that your benefits tend to increase every year thanks to cost of living adjustments (COLAs). Without that feature, it would be impossible to keep up with inflation, and benefits would lose a lot of purchasing power over time. The latest COLA, taking effect in 2025, is 2.5% -- just a smidge below the 2.6% average annual increase over the past two decades.

2. The maximum monthly benefit is increasing, too

The average monthly Social Security retirement benefit was $1,922 as of September -- about $23,000 annually. It's not so much, right? Fortunately, if you've earned more than average over your working life, you'll receive more than the average benefit.

The new maximum monthly benefit for 2025 is $5,108 (about $61,300 for the year), up from 2024's $4,873. That should sound more like it, but hold on. Unfortunately, hardly anyone will qualify for it. That's because to qualify, you'll need to:

Earn at least the maximum income that counts in Social Security calculations -- which will be $176,100 for 2025 and has been similarly steep in past years.
Earn at least that maximum for at least 35 years.
Delay collecting your benefit until age 70.

Still, even if you don't get the maximum benefit, know that there are things you can do to increase your future benefits. Choosing the best age at which to claim your benefits is one of them, and for most people, the best age to claim benefits is 70.

3. More income will be subject to Social Security taxation

You may not realize it, but when 6.2% of your paycheck is deducted for Social Security (plus 1.45% for Medicare), your employer is kicking in the same amount. Those tax rates don't change for 2025, but the amount of your income that's taxed for Social Security will. It rises from $168,600 to $176,100.

So if you earn $75,000 or you earn $176,100, your entire income is subject to taxation. But if you earn $1,176,100, only $176,100 is taxed for Social Security and $1 million is not.

4. Earnings limits are rising

Another number increasing is the earnings limit. If you haven't yet reached your full retirement age (FRA) and you work while collecting Social Security, you can only earn a certain amount before Uncle Sam starts withholding some of your Social Security benefits. (Your full retirement age is 66 or 67 for most people, and 67 for those born in 1960 or later.)

That limit was $22,500 for the year in 2024, and it rises to $23,400 for 2025. That's for those who won't reach their FRA in 2025, and they'll forfeit $1 in benefits for every $2 earned above the limit. For those who will reach it, the earnings limit is bigger -- $62,160, up from $59,520 in 2024. And the withholding is $1 for every $3 in excess earnings.

This may sound terrible, but know that those sums withheld eventually return to you in the form of increased future benefits.

5. Disability benefits are increasing

The Social Security Administration (SSA) estimates that the average monthly benefit for disabled workers, their spouses, and children will be $2,826 in 2025, up from $2,757. For all disabled workers, it rises from $1,542 to $1,580.

6. Benefits for widows, widowers, and surviving children are rising

Widows, widowers, and surviving minors also can receive Social Security benefits, and the SSA estimates that such benefits will be $1,832 for an aged widow or widower, up from $1,788. A widowed mother and two children will collect an average of $3,761 per month, up from $3,669.

7. Medicare Part B premiums will likely increase, too

Back to Medicare now. Retirees commonly have their Medicare Part B premiums automatically taken from their Social Security benefits. For 2024, that monthly sum is $174.70. The 2025 sum isn't known at the time of this writing, but it's projected by some to rise to $185 for 2025.

Social Security benefits are vital to most retirees, and they keep many millions above the poverty line. So it can be smart to keep up with Social Security changes in order to optimize your retirement planning.