The 2025 COLA increase will boost benefits by about 2.5%. This will mean Social Security recipients will receive about 50 dollars extra on average. The downside for workers is the fact that they will need more earnings to get 1 work credit per term. So, the cost-of-living adjustment will be beneficial for retirees but it will affect those workers with the lowest wages.
Bear in mind that to receive Social Security retirement benefits you must have worked for at least 10 years. In ten years, you can only earn 40 work credits. Do not forget that the maximum number of work credits per year is 4.
Earnings a worker needs to get 1 Social Security credit in 2025 after COLA
The Administration refers to Social Security or work credits as the quarter of coverage in the 2025 COLA Fact Sheet. In this announcement, SSA confirmed that the earnings a worker will need in 2025 to get a single work credit will be $1,810, up from $1,730.
This figure has increased a lot in the last few years affected by the huge COLA increases that took place. Although you may think that the increase may not be a lot, check how it can change in less than 10 years. Thus, in 2025, you will need $7,240 instead of $6,290, $950 more in earnings after COLA.
Year and earnings you needed to get 1 work credit
- 2018: $1,320
- 2019: $1,360
- 2020: $1,410
- 2021: $1,470
- 2022: $1,510
- 2023: $1,640
- 2024: $1,730
- 2025: $1,810
Source: https://www.ssa.gov/oact/cola/QC.html & https://www.ssa.gov/news/press/factsheets/colafacts2025.pdf
Social Security credits evolution after COLA increases
For your information, the first year that Social Security provides data about the amount of earnings needed to earn one quarter of coverage is 1978. Back then, it was $250.
Ten years later, in 1988, it increased to $470. As you can see it has gone up by almost double the amount. As of 1998, the earnings you needed to get one work credit was 700 dollars.
In 2008, it reached the staggering figure of $1,050 if compared with the initial $250. It has continued increasing steadily and it reached $1,320 in 2018.