In 2025, retirees and other Social Security recipients in the United States will see an increase in their monthly payments. This annual adjustment, known as the Cost-of-Living Adjustment (COLA), aims to help Social Security benefits keep up with inflation, reducing the impact of rising prices on beneficiaries’ incomes. Here, we’ll break down how these adjustments will impact benefits and income limits for retirees, widows, widowers, and individuals with disabilities.
These figures are averages, and individual benefits can vary based on the beneficiary’s specific circumstances, including their earnings history and the number of years they contributed to Social Security.
Increase in monthly benefits for widows and retirees individuals with disabilities
The 2025 increase affects not only retirees but also widows, widowers, and people with disabilities. Here’s an overview of how these changes will look for some common beneficiary categories:
- Widowed mother with two children: This benefit will increase from $3,669 to $3,761 monthly.
- Older widows and widowers living alone: Monthly benefits for this group will rise from $1,788 to $1,832.
- Disabled worker with spouse and children: Their monthly benefit will go up from $2,757 to $2,826.
How income limits for retirees will change
If you’re collecting Social Security retirement benefits before reaching full retirement age and still earning income, you’ll need to be aware of the “retirement earnings test.” This test sets a cap on how much you can earn before Social Security reduces your benefits.
In 2025, if you haven’t yet reached full retirement age, you can earn up to $1,950 a month ($23,400 annually) without seeing any reductions in your benefits. For every $2 earned over this limit, Social Security will reduce benefits by $1. Comparatively, in 2024, the earnings limit was set at $1,860 monthly ($22,320 annually).
The income cap increases in the year you reach full retirement age. In 2025, this higher limit will be $5,180 per month ($62,160 annually) until the month you turn your full retirement age. Once you reach that milestone, any additional income will no longer impact your benefits. For income that exceeds this limit, Social Security will only reduce your benefits by $1 for every $3 above the threshold. In 2024, this higher income limit was $4,960 monthly ($59,520 annually).
How these changes impact your income planning
The 2025 COLA provides more financial support not just for retirees but also for widows, widowers, and people with disabilities. However, if you’re earning additional income, these new income limits will play an essential role in financial planning. Those working part-time or generating additional income will need to consider these thresholds to avoid unexpected reductions in their Social Security benefits.
For people reaching full retirement age in 2025, the higher earnings limit allows more of their additional income to remain untouched. This can be particularly helpful for those who choose to keep working after retirement age or need extra income to cover their living expenses.
Changes in other Social Security thresholds
Beyond COLA and adjustments in earnings limits, Social Security makes annual adjustments to other thresholds as well. These updates aim to ensure the program remains stable and reflects current living costs. Some of these changes include adjustments to the maximum taxable earnings and benefits for disabled workers.