3 Game-Changing Social Security Updates You Need to Know Under the New Administration

Anticipating changes to Social Security in 2025 might help you start planning for the new year and identify any changes you can make to increase your eligibility for the most significant benefits. People who believe that these measures exclusively affect pensioners would be mistaken. Current employees must monitor their Social Security credits and determine how much their earnings will be subject to the 6.2% Social Security tax.

Social Security’s cost-of-living adjustment for 2025:

The Social Security Administration (SSA) recently stated that the yearly cost-of-living adjustment (COLA) 2025 will be 2.5%. As projected, this is the smallest rise since 2020, after a 3.2% gain in 2024. According to the SSA, the 2.5% rise will result in an extra $49 for the average retiree, bringing the average monthly check from $1,927 to $1,976. Married couples will get an average $75 rise, bringing their monthly payout to $3,089 from $3,014.

The COLA for 2025 is 2.5%. The final figure is based on the July, August, and September CPI figures. The SSA utilizes these three sets of statistics to establish the yearly COLA. Remember that a lower inflation rate should result in a slower cost increase. Still, it does nothing to reduce the existing food, utilities, and housing rates, which many people struggle to afford. 

The full retirement age (FRA) in 2025:

Retirees must wait longer before reaching their full retirement age (FRA) in 2025. If you were born between 1955 and 1960, your full retirement age will steadily increase until it reaches 67. 2025, the full retirement age will be 66 years and ten months. The FRA for persons turning 66 in 2024 is 66 years and eight months. Here is when you will achieve your FRA, according to your birth year.

• If you were born in 1958, your FRA is 66 and six months, attained in 2024.
• If you were born in 1959, your FRA is 66 years and 10 months, which will be reached in 2025.
• If you were born in 1960 or after, your FRA is age 67, which will be achieved in 2026 or after.

If you retire at 62, the earliest possible Social Security retirement age, your payout will be less than if you wait until your full retirement age. The more months between age 62 and your FRA, the lower your monthly payments will be. Benefits will grow from the moment you reach full retirement age until you begin receiving benefits or when you reach 70. For every year you postpone obtaining Social Security benefits after reaching full retirement age, 8% is added to your benefits. 

Social Security credits and taxes in 2025:

By 2025, you’ll have to earn more to qualify for Social Security credits, and the wage threshold for Social Security taxes will rise—social Security credits. To be eligible for retirement benefits, you must earn minimum Social Security credits. The Social Security Administration cannot pay you if you do not have enough credits. To become eligible for benefits, you must obtain 40 labor credits, a maximum of four each year. The amount of credits you have earned is also used by the Social Security Administration to evaluate your eligibility for retirement or disability benefits, Medicare, and survivor benefits for your family. When calculating benefits, Social Security limits the amount of income that can be taxed and credited. The Social Security tax maximum for 2025 is $176,100, up $7,500 from $168,600 in 2024. The tax cap is adjusted to inflation and is expected to climb in 2026. 2024In  the pay ceiling increased by $8,400 to $168,600 compared to $160,200 the previous year.