Social Security recipients will see their rates go up by the least amount since 2021 in January 2025, when they get a 2.5% cost-of-living adjustment (COLA).
Suze Orman, a financial analyst who recently talked about the change, says that this small change is a sign of a good economic trend because inflation is slowing down.
The increase may not seem like a big deal, but Orman stressed how important it is and how important Social Security is for seniors.
It might seem bad that the inflation adjustment is going down because everyone wants more money to pay for things, but Orman said it was good news because it meant that fundamental prices were no longer going up very quickly.
The 2023 adjustment, on the other hand, was a big 8.7% to account for 2022’s high inflation rate. Here are some more facts about Social Security for the year 2025.
Everything will change again in Social Security as of January
In his speech, Orman stressed how important it is that Social Security’s yearly COLA changes benefits to reflect inflation. In contrast to 401(k) and IRA plans, Social Security is meant to help people keep their purchasing power when their living costs change.
He also said that your 401(k) and IRA assets do not come with any guarantees and do not even have an inflation adjustment built in. People who will get benefits in the future will not have to worry about missing out on the COLA if they wait to get them.
Deciding to wait to file for Social Security can lead to higher monthly benefits, especially for people who wait until they reach their full retirement age (FRA) or even age 70.
Orman made it clear that you will be able to get a much bigger benefit if you wait until your full retirement age (66 or 67, depending on your birth year) or until age 70.
He also said that you will get annual COLA adjustments even if you have not started getting benefits yet. You no longer have a reason to get a smaller Social Security benefit early.
Social Security also applies the earnings limit to people who are receiving benefits but are still working and have not reached full retirement age yet.
For a short time in 2025, beneficiaries whose FRA is less than $23,400 will see their benefits cut by $1 for every $2 they earn above that amount.
For people who reach FRA in 2025, the upper limit goes up to $62,160. Orman said that any benefits that are taken away because of this earnings test are only temporary.
How much will the Social Security earnings limit increase next year for beneficiaries?
In 2025, the Social Security wage base will rise to $176,100. This is the most money that will be taxed by Social Security. This means that you only have to pay Social Security taxes on income up to that amount.
If your income is more than this amount, you will not have to pay payroll taxes on it. Orman also said that beneficiaries and people who will retire in the future should know about these changes when they are making plans to retire.
The 2.5% COLA may not seem like much, but it shows that the SSA is a reliable way to get income that keeps up with inflation, making it an important tool for planning for retirement.
Monthly checks will increase by 2.5% as of January 2025
Along with the earnings limit for Social Security, monthly checks will go up by 2.5% because of the cost of living adjustment (COLA) that was announced last month.
With this 2.5% annual increase, monthly benefits for retired workers, survivors, disabled people, and people who get Supplemental Security Income (SSI) will go up, as explained below:
| Retirement benefits (Including 2.5% COLA) | Survivor benefits (Including 2.5% COLA) | SSDI benefits (Including 2.5% COLA) | SSI benefits (Including 2.5% COLA) |
| On average: $1,948
Age 62: $2,778 Age 67: $3,918 Age 70: $4,995 |
On average: $1,543
Individual: $1,817 2 Children: $3,744 |
On average: $1,575
Blind recipients: $2,655 Maximum payment: $3,918 |
On average: $715
Individuals: $967 Couples: $1,450 Essential person: $484 |
