The arrival of a new year often brings significant changes. Many individuals change jobs or health insurance at this time, and they may also be trying to follow through on New Year’s resolutions aimed at self-improvement.

Alongside these personal changes, there are also government updates regarding taxes, retirement plans, and Social Security that everyone needs to understand. Below are five key Social Security changes that retirees and workers should be aware of this year.

1. 2.5% Cost-of-Living Adjustment (COLA)

The Social Security Administration implemented a 2.5% Cost-of-Living Adjustment (COLA) that applies to benefits starting from December 2024. However, since benefits are paid the following month, most recipients can expect to see this increase reflected in their January payments.

Your January payment date will depend on your birth date:

• Born from the 1st to the 10th: Jan. 8, 2025
• Born from the 11th to the 20th: Jan. 15, 2025
• Born from the 21st to the 31st: Jan. 22, 2025

If you also receive Supplemental Security Income (SSI), you should have already received your first payment for 2025 on Dec. 31, 2024. SSI payments are typically made on the first of the month, unless that day is a weekend or holiday, such as New Year’s Day.

2. Increased Social Security Work Credit Requirements

In order to earn Social Security work credits in 2025, workers will need to earn slightly more. You need at least 40 credits to be eligible for retirement benefits, with a maximum of four credits available each year.

In 2024, one credit was granted for every $1,730 earned. In 2025, it will increase to $1,810 to earn one credit. Most workers, even those with part-time jobs, will likely still earn the necessary $7,240 to obtain their four annual credits.

3. Higher Limits on Social Security Payroll Taxes

Some employees may see a rise in their Social Security payroll taxes in 2025 because the taxable earnings threshold has increased. In 2024, taxes applied only to the first $168,600 of earnings, which will rise to $176,100 in 2025.

For most individuals, Social Security taxes are already deducted from all their pay, making this change minor. However, higher-income earners could end up paying an additional $465 per year if traditionally employed or $930 if self-employed.

4. Higher Earnings Test Limitations

For retirees under their full retirement age (FRA) who work while receiving Social Security, the earnings threshold before deductions occur has increased for 2025. Retirees who reach their FRA do not face deductions, regardless of their earnings.

The limit for those under their FRA in 2024 was $22,320, resulting in a $1 deduction for every $2 earned over that amount. For those who turned FRA in 2024, the limit was $59,520, leading to a $1 deduction for every $3 over that figure. In 2025, these limits will be adjusted to $23,400 and $62,160, respectively.

5. Higher Full Retirement Age for Those Born in 1959 Compared to 1958

This year, the full retirement age is now 66 years and 10 months for individuals born in 1959. This age has been gradually increasing and will reach 67 for those born in 1960 or later, starting next year.

You can still choose to claim your benefits as early as age 62, no matter your FRA. However, claiming before reaching your FRA can reduce your monthly benefits by as much as 30%. It’s crucial to evaluate your options before deciding in order to avoid receiving less than you deserve unless you face severe health or financial constraints that prevent you from delaying.

These Social Security updates for 2025 are indeed new, but they also reflect annual adjustments that occur regularly. Whether you’re currently employed or receiving Social Security, being aware of these regulations will remain important as they will carry into 2026 and beyond.

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