There are certain aspects of life where change can be a negative thing. If your employer decides to do away with remote work and make everyone return to the office on a full-time basis, that's a change you may not rush to embrace. Similarly, if your doctor tells you to cut out fried foods and reduce your salt intake, you may very grudgingly accept that change to your diet.
But change isn't always a bad thing. And in the context of Social Security, it has the potential to be quite positive next year. Here are three ways the program could change for the better in 2025.
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1. Benefits should get a boost
Social Security benefits usually get an annual cost-of-living adjustment, or COLA, the purpose of which is to help those checks maintain their buying power as life gets more expensive. However, there's no guarantee that there will actually be a COLA in any given year. For one to happen, there needs to be inflation from one year to the next.
Thankfully, the period of unusually high inflation that characterized much of 2022 is over. But living costs have still been consistently rising on an annual basis so far in 2024. This means that next year, Social Security benefits are likely to rise to some degree. The size of that bump, however, is still uncertain, as each January's COLA is based on the prior third-quarter's inflation data.
A recent forecast from the nonpartisan Senior Citizens League estimates that 2025's Social Security COLA will be 2.57%. That's lower than the 3.2% raise beneficiaries got at the start of 2024 -- but it is still a raise.
2. The maximum monthly benefit should increase
Not all workers pay Social Security taxes on all of their wages. There's a cap on the wage tax that's adjusted each year -- higher earners only pay into the program for every dollar they earn below that cap.
The flip side of that coin is that there's also a maximum monthly benefit that Social Security will pay. In 2024, the maximum monthly benefit for someone who claimed at their full retirement age is $3,822. But that number is likely to increase in 2025.
Of course, it's only higher earners who are eligible for Social Security's maximum monthly payment. But if you're in that boat and are retiring in 2025, you'll have a nice benefit coming to you.
3. There should be a higher earnings-test limit
You might assume that you can't work and collect Social Security at the same time, but that's not true. You absolutely can. However, if you're working while receiving benefits and you haven't yet reached your full retirement age, you risk having some of your Social Security withheld if your income exceeds a certain threshold known as the earnings-test limit.
This year, the earnings-test limit is $22,320, or $59,520 if you have not yet reached your full retirement age but will reach it before the end of the calendar year. Next year, these limits are likely to increase, which means you should have the leeway to earn a bit more money without having to worry about withheld Social Security.
To be clear, though, the portion of your benefits that's withheld due to exceeding the earnings-test limit is not lost to you forever. That money will get added back into your monthly payments once you reach your full retirement age.
Change has the potential to be a good thing or a bad thing -- it depends on the situation at hand. But in the context of Social Security, there are a number of positive things for seniors to look forward to in 2025.
