Retirees will earn more money from Social Security starting from this date – Two changes that confirm it

Social Security plays an essential role in providing income to millions of retirees and continues to be a vital source of financial support. However, despite its longstanding presence, Social Security undergoes yearly adjustments, some of which can positively impact beneficiaries’ financial situations. Looking ahead to 2025, two significant changes are anticipated, which could provide retirees with a little extra financial relief.

1. An Increase in Monthly Social Security Benefits

Each year, Social security benefits are adjusted to account for inflation, with the aim of preserving retirees’ purchasing power. This adjustment, known as the cost-of-living adjustment (COLA), ensures that beneficiaries’incomes keep pace with rising costs over time. In 2024, retirees saw a COLA increase of 3.2%, providing them with a modest boost in benefits. However, the high inflation rates experienced in previous years have since cooled in 2024, leading experts to believe that the COLA for 2025 will be lower than it was in 2024.

While the final COLA figure for 2025 is not yet confirmed, it is expected to be around 2.5%, though this number could still fluctuate. The official COLA figure is determined by inflation data from the third quarter of the year, and since September’s data has not yet been finalized, the final number will be released on October 10. For now, retirees can reasonably expect their monthly Social Security payments to increase, even if only by a modest amount.

It’s important to remember that Social security benefits only receive a COLA when inflation rises. In some years when inflation remains flat, benefits may not increase. nevertheless, with inflation still present in 2025, even if at a lower rate than in previous years, retirees should anticipate some increase to their monthly checks, providing a small but helpful financial boost.

For those who feel underwhelmed by the anticipated 2.5% COLA, it’s worth considering that a lower COLA also reflects less inflation, meaning the cost of goods and services isn’t rising as sharply. This, in turn, means that while the increase in benefits might be smaller, retirees may also experience less strain from rising prices.

2. A Higher Earnings-Test Limit

In addition to the expected rise in monthly benefits, there’s another positive development on the horizon: an increase in the earnings-test limit. Social Security beneficiaries who choose to continue working while receiving benefits can earn wages without penalty, but this depends on whether they have reached full retirement age (FRA). For those who have reached FRA, there are no earnings limits, and retirees can earn any amount of money without it affecting their Social Security benefits.

However, individuals who begin collecting Social Security before reaching ENG are subject to an earnings-test limit. If their earnings exceed this limit, a portion of their benefits may be withheld. In 2024, the earnings-test limit was set at $22,320 for those who had not yet reached FRA, and $59,520 for those who were reaching ENG within the year.

Looking ahead to 2025, it is anticipated that these earnings-test limits will increase, in line with inflation. Like the COLA figure, the official earnings-test limits will also be announced on October 10. For retirees who plan to work while receiving benefits, this increase in the earnings-test limit could allow them to earn more without having to worry about a reduction in their Social Security payments. This change could be especially beneficial for those who rely on supplemental income to cover their living expenses.

To stay informed about these developments, it’s worth checking the Social Security Administration’s website on October 10, when the official numbers for both the COLA and earnings-test limits will be released. These changes, though incremental, could make a meaningful difference in the day-to-day finances of those who depend on Social Security as a primary source of income.