Social Security Disarray For Those Retiring Post-2025 COLA Prediction

Social Security Disarray For Those Retiring Post-2025 COLA Prediction

In October, more than 68 million people collected an average Social Security check of $1,787.08. While this is a relatively modest monthly payout, it’s nevertheless vital to the financial well-being of many of these recipients — especially retired workers.

Additionally, 23 years of annual surveys by national pollster Gallup found that between 80% and 90% of retirees (including 88% in 2024) need their Social Security benefit, in some capacity, to cover their expenses.

But this is far from the only change set to take place when the calendar turns to 2025. If you’re still working and receiving a Social Security check, there are a couple of big changes you’ll want to be aware of.

Arguably, the biggest Social Security change in 2025 for beneficiaries who are still working has to do with adjustments to income thresholds associated with the retirement earnings test.

The retirement earnings test allows the SSA to withhold some or all of your benefits depending on how much you earn and whether or not you’ve reached/will reach your full retirement age in the current year.

Your full retirement age represents the age you’re eligible to receive 100% of your retired worker benefit, and it’s determined by your birth year. Anyone born in or after 1960 has a full retirement age of 67.

Regardless of when you choose to begin collecting your retired worker check from Social Security, the retirement earnings test is no longer applicable once you’ve reached your full retirement age. But if you’ve not yet reached your full retirement age and are collecting a monthly payout from Social Security, early filer penalties may apply.

For example, early filers who won’t reach their full retirement age in 2024 can have $1 in benefits withheld by the SSA for every $2 in earned income (wages and salary, but not investment income) above $22,320, which works out to $1,860 per month. In 2025, this same category of early filers will be able to earn up to $23,400 ($1,950 per month) before withholding kicks in.

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