Social Security's 2.5% cost-of-living adjustment (COLA) for 2025 was disappointing for many seniors. It added just $49 to the average monthly check, and that's not enough for a lot of households. Most U.S. seniors will have to look to their savings or other government benefits if their Social Security benefits don't go far enough.
But there's one group of seniors that could get an extra boost this year. The difference probably won't be life-changing, but even a little extra cash could make life more comfortable.
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Social Security's earnings test limits went up
Americans become eligible to start collecting Social Security retirement benefits as soon as they turn 62, but there are a few drawbacks to claiming them before you reach what the government deems your full retirement age (FRA) -- between 66 and 67, depending on your birth year. The biggest downside is that for each month early that you claim, the size of all your checks gets reduced fractionally. If you apply when you turn 62, you'll be shrinking your monthly benefits by 30%.
Those who claim their benefits before they reach their FRA and also continue to work may run into the Social Security earnings test: If you earn more than a certain amount during the year, the program begins to withhold some money from your benefit checks.
In 2024, if you were a beneficiary who was under your FRA all year, for every $2 you earned over $22,320, $1 was cut from your benefits. If you reached your FRA in 2024, you only had $1 withheld for every $3 you earned over $59,520 -- if you hit that earnings level before your birthday.
These limits were raised to $23,400 and $62,160, respectively, for 2025. That means workers who have claimed Social Security prior to reaching their FRA will be able to make more money before the Social Security Administration starts holding anything back from their checks. Those earning more than $23,400 who are under their FRA in both years will hold onto an extra $540 this year compared to 2024.
Those reaching FRA could see even bigger gains
Money withheld due to the earnings test isn't gone forever. Once you reach your FRA, the agency recalculates your benefit and gives it a boost if it previously withheld money due to the earnings test. So those reaching their FRA this year -- many born in 1958 and a few born in 1959 -- could see a larger boost at this time. And after you reach your FRA, you are no longer subject to having money withheld due to the earnings test, regardless of how much income you earn from other sources.
It's impossible to make a general statement about what kind of increase a beneficiary in these circumstances can expect when they reach their FRA: For each person, it will depend on how much the government withheld in the past. If you're curious about your individual situation, contact the Social Security Administration for personalized advice. You can reach out online, by phone, or by scheduling an appointment at your local Social Security office.
If you won't reach your FRA this year, you should know that earnings test limits generally go up annually. So it's possible that next year, you may have even less withheld due to these limits. That's something to keep in mind when preparing your budgets for future years.
