Each month, the Social Security Administration (SSA) pays benefit checks to millions of qualifying Americans such as retirees, disabled individuals, or survivors. Over the past few months, the SSA has been undergoing several key changes. According to an announcement from federal officials, beneficiaries of Social Security will be receiving a 2.5% increase to their benefits. Additionally, the retirement age, taxable earnings, and public sector employees have also been impacted by change.
Social Security beneficiaries get an increase
As of January, the Cost of Living Adjustment (COLA) for 2025 came into effect and as a result, the average monthly retirement benefit welcomed a 2.5% increase which brought the average benefit amount up from $1,927 to $1,976. The Cost of Living Adjustments are made each year in order to aid beneficiaries with managing the effects of inflation. Some advocacy groups, however, feel that this adjusted amount still falls short amid rising costs of living.
In a statement, the Social Security Administration stated that, “The Social Security adjustments for 2025 reflect our commitment to maintaining the program’s long-term stability while ensuring benefits remain fair and responsive to economic conditions.”
Another change to the benefit program is the increase of the Full Retirement Age (FRA). Individuals born in 1959 will now notice that their full retirement age has been increased to 66 years and ten months. This increase forms part of the gradual and continuous shift to a full retirement age of 67 for those born in 1960 and later.
Those close to retirement should also note that claiming earlier than your full retirement age could result in a slightly lower benefit. Conversely, by holding off on claiming your Social Security benefits beyond your full retirement age up to the age of 70, you can receive higher monthly benefits.
Other changes to the program
Another major change that came into effect not too long ago has been the Social Security Fairness Act which was signed into law by former President Joe Biden at the beginning of the year in January.
“The bill I’m signing is about a simple proposition: Americans who have worked hard all their life to earn an honest living should be able to retire with economic security and dignity — that’s the entire purpose of the Social Security system. This is a big deal,” Biden proclaimed at a signing ceremony at the White House in January.
The Fairness Act effectively eliminated the provisions of both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). Due to the WEP and the GPO, millions of public sector employees had had their benefits reduced. With the Social Security Fairness Act coming into effect, this cohort will now have their benefits fully restored and retroactive payments dating back to January 2024 will also be made to them.
The earnings limit for those who are receiving Social Security benefits prior to reaching their full retirement age has also been increased. The cap now stands at $23,400 and as such, if you earn more than this amount, you could potentially see a temporary reduction in your benefits. Furthermore, the maximum taxable earnings threshold has been increased to $176,100. Subsequently, the income subject to Social Security payroll taxes will be increased as well.
Achieving a Better Life Experience accounts will be also be expanding its eligibility as of 2026 by increasing the qualifying age for disabilities from 26 to 46. Around six million more Americans could potentially benefit from this. Achieving a Better Life Experience helps “people with disabilities save and invest without jeopardizing federal benefits.”
Policymakers are in a continuous debate regarding the financial stability of the Social Security program for the long term. As a result, these adjustments are being made and some lawmakers are in favor of further reforms in the the hopes of addressing the funding shortfall that has been projected.