As of 2024, nearly 68 million Americans were collecting social security. Of these, a little more than 51 million people were retired workers. For those over 65, Social Security is a major source of income, with 12 percent of men and 15 percent of women relying on those monthly benefits for at least 90 percent of their income.

Even though the program has been around for almost a century, Social Security can change from year to year. Here are five big changes to prepare for in 2025.

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1. A 2.5% cost of living adjustment

In 2025, social security benefits will increase by 2.5%. For context, benefits are eligible for a cost of living adjustment (COLA) each year, which is tied to inflation.

Because there was a lower rate of inflation in 2024, benefits have a modest increase in 2025. Once this change takes effect, the average monthly retirement benefit is expected to grow from $1,927 to $1,976.

Unfortunately, the 2025 cost-of-living adjustment could only do retirees so much good. And not just because it’s a pretty small increase. Rather, it’s because the program’s annual increases tend not to meet the financial needs of seniors. Senior League rEPORTS that, as of 2023, Social Security recipients have lost 36% of their purchasing power since 2000.

2. A taxable maximum of $176,100

Workers help fund Social Security through a separate payroll tax. These taxes are different from federal and state taxes — which apply to all income, but for Social Security, there’s a limited amount of income that’s taxable each year.

In 2025workers are on the hook for Social Security taxes on their first $176,100 in wages. This is up from $168,600 in 2024. Salaried workers can share this tax liability equally with their employers, while the self-employed pay it in full. Those facing higher taxes in the new year can help offset that burden through growth Traditional IRA contributions, which exempt part of the income from taxes.

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3. An increase in amounts exempt from the earnings test

Recent data from the T. Rowe Price Retirement Savings and Spending Study finder that approximately 20% of current retirees work in some capacity. And among working retirees, 48 ​​percent keep a job for financial reasons, while 45 percent do so for social and emotional benefits.

Social Security will continue to pay benefits to working seniors. But beneficiaries in this boat who have not reached full retirement age are subject to an earnings test.

In 2025, the earnings-tested exemption is $23,400, up from $22,320 in 2024. This means recipients can earn up to $23,400 without losing a portion of their Social Security checks. From there, $1 in Social Security benefits will be withheld for every $2 of earnings.

The earnings test exception will be higher, however, for seniors who reach full retirement age later in 2025. In that case, it’s possible to earn up to $62,160 without losing any Social Security benefits, increasing by to $59,520 in 2024. From there, $1 in Social Security benefits is withheld on $3 of earnings. Withheld benefits are then repaid once beneficiaries reach full retirement age.

4. A maximum monthly benefit of $4,018 at full retirement age

Because there is only so much income the Social Security Administration will tax each year to fund the program, there is only so much money it will pay out to beneficiaries in return. In 2025, the maximum monthly benefit Social Security will pay at full retirement age is $4,018, up from $3,822 in 2024.

That said, seniors don’t have to settle for the program’s maximum monthly benefit at full retirement age. It is possible to accumulate delayed retirement credits up to the age of 70 years for the postponement of social security benefits. They increase benefits by 8% per year, so it’s possible collect more of $4,018 per month in 2025.

5. A higher earnings requirement for work credits

Social Security does not automatically grant senior benefits upon reaching a certain age. Rather, benefits are earned by paying payroll taxes and earning credits for doing so.

The Social Security Administration allows workers to earn up to four credits per yearwhich would fully insure you within the program, but the amount of earnings associated with a single loan may change over time. In 2025, a single work credit will be worth $1,810 of earnings, up from $1,730. Part-time workers should be careful about their income if they want to secure four credits for the year.

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This article provides information only and should not be construed as advice. Offered without warranty of any kind.