2025 Social Security Boost: What Beneficiaries Need to Know

A 2.5% COLA increase in 2025 will raise Social Security and SSI benefits, helping 72.5 million Americans keep pace with inflation.

CONTENTS:

• Social Security increases benefits, adjusts rules.
• Maximize Social Security by delaying benefits.
• 2025 Social Security increases support.

2025 Social Security Boost: What Beneficiaries Need to Know

Social Security increases benefits, adjusts rules

2025 Social Security Boost: What Beneficiaries The Social Security Administration (SSA) has announced several important changes for 2025 aimed at supporting retirees and other beneficiaries in the face of rising inflation. One of the key updates is an increase in the annual taxable maximum from $168,600 to $176,100, effective January 1, 2025. This adjustment means income beyond this threshold will not be taxed under Social Security, although there is no cap on income subject to Medicare taxes.

Additionally, the SSA will implement a 2.5% Cost of Living Adjustment (COLA) across various benefit categories, impacting payments for retirees, survivors, disabled individuals, and SSI recipients. Here’s a summary of the new average monthly payment amounts starting in January 2025:

– Retirement benefits (with 2.5% increase): Average of $1,948, with amounts varying by age (e.g., $2,778 at age 62, $3,918 at age 67, and $4,995 at age 70).

– Survivor benefits: Average of $1,543, with payments up to $3,744 for a family with two children.

– Disability (SSDI) benefits: Average of $1,575, up to $3,918 for some recipients.

– SSI benefits: Average of $715, up to $1,450 for couples.

For payment scheduling in January:

– RSDI beneficiaries who filed before May 1997 will receive checks on January 3.

– Those who filed after 1997 will receive payments on dates that align with their birth date: January 8 (for those born 1st–10th), January 15 (11th–20th), and January 22 (21st–31st).

– SSI recipients will receive an extra payment on December 31, 2024, due to January 1 falling on a holiday, with regular payments resuming in February.

Further updates include a new rule that expands the public assistance household definition to include SNAP benefits for SSI applicants, allowing support from household members to be counted as income. Additionally, food donations will no longer be considered “unearned income” for SSI recipients. Instead, only housing support will be assessed, benefiting about 9% of recipients by stabilizing their payment amounts.

Maximize Social Security by delaying benefits

2025 Social Security Boost: What Beneficiaries If you want the maximum Social Security benefit of $5,108 per month in 2025, it’s crucial to have a long career with high earnings. Here’s what you need to know.

The average Social Security benefit as of September was $1,921.56 per month, which may not be enough to cover rising costs in retirement. However, high earners can qualify for significantly more. The maximum benefit amount in 2025 is set at $5,108, increasing each year with Social Security’s cost-of-living adjustment (COLA).

Three main factors determine the size of your Social Security benefit:

1. Your earnings history: The SSA considers your 35 highest-earning years, adjusted for wage inflation, to calculate your average monthly earnings.

2. When you were born: Full retirement age varies based on birth year, with the maximum benefit available to those born in 1960 or later when they reach age 70.

3. When you claim benefits: Benefits increase the longer you delay claiming, up to age 70.

To maximize Social Security benefits, you must consistently earn at least the maximum taxable wage threshold for 35 years, which was set at $168,600 in 2024 and will increase to $176,100 in 2025. Any income above this cap isn’t counted toward Social Security taxes or your benefit calculation. Since earnings caps typically increase each year, your salary must also rise to maintain eligibility for the maximum benefit.

It’s not enough to simply have high earnings early on. Earnings in your 60s have a significant impact on your final benefit. To receive the maximum benefit, you must wait to claim until age 70 in 2025. Only a small group of Americans—those with lengthy, high-paying careers well into their 60s—will qualify.

For most people, working a high-paying job helps maximize Social Security benefits, but it may not be necessary to reach the maximum possible benefit if you have other retirement savings. Claiming benefits at age 70 can still provide a significant boost to your monthly income, even if you choose to retire earlier.

2025 Social Security increases support

2025 Social Security Boost: What Beneficiaries In 2025, Social Security and Supplemental Security Income (SSI) recipients will see a 2.5% cost-of-living adjustment (COLA), providing increased financial support for over 72.5 million Americans. This adjustment will begin on December 31, 2024, for the nearly 7.5 million SSI beneficiaries and in January 2025 for the 68 million other Social Security recipients.

COLA adjustments, which aim to keep up with inflation, are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The increase for 2025 means an individual’s annual SSI benefit could rise from $11,321.49 in 2024 to $11,604.53, an increase of $967. For eligible couples, the total will go from $16,980.36 to $17,404.87, a $1,450 increase.

Besides retirees, SSI benefits also support people with disabilities, with eligibility based on “work credits” earned through employment or self-employment income. In 2024, workers earned one credit for every $1,730 in wages, requiring $6,920 in annual earnings to get all four credits. Family members, including spouses and children, may also qualify for benefits based on the recipient’s work history if they meet certain criteria.

SSI recipients will receive a COLA notice in early December, detailing the adjusted payment amounts and schedules in a clear and concise format.