Did you know that Social Security is almost 90 years old? The Social Security Act was signed into law in August 1935, and for decades older Americans have been able to collect monthly benefits.

But just because Social security has been around for a long time does not mean the program remains the same. Recently, the Social Security Administration announced a number of key changes to the program that are expected to take effect in 2025. And it’s important to be aware of this, whether you’re retired or not. Here’s what awaits us in the new year.

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1. Benefits increase by 2.5%

Each year, Social Security benefits are eligible for an automatic cost-of-living adjustment (COLA). The goal of COLAs is to help ensure that seniors can maintain their purchasing power from year to year as the cost of living naturally increases.

In 2024, Social Security benefits increased by 3.2%, but next year’s COLA will be lower. Come 2025, benefits will only increase by 2.5%. However, it should be noted that the Social Security COLA reduction for 2025 follows a slowdown in inflation.

You may have noticed that your grocery and utility bills aren’t increasing as quickly these days. So what you lose in the form of a smaller increase in Social Security in the new year, you gain by not having to spend as much money on everyday essentials. Overall, things should largely balance out.

2. Income testing limits are increasing

Seniors on Social Security are allowed to earn money while receiving benefits. And once you’ve reached full retirement ageyou don’t have to worry about how much you earn. You could take home $500,000, and it won’t result in any Social Security withholding.

But if you choose to work while receiving social security Before When you reach full retirement age, you’ll need to be aware of the program’s income testing limits. In 2025, you can earn up to $23,400 without any negative consequences. But from there, $1 in Social Security will be withheld for every $2 you earn.

There is also a higher income cap for people who will reach full retirement age by 2025 but start the year without having reached it yet. In this case, the earnings threshold to be retained is $62,160. From there, $1 in Social Security will be withheld for every $3 you earn.

It’s important to know what the Social Security income limits look like so you can plan accordingly. But also be aware that the services retained are not permanently lost. You TO DO get that money back once you reach full retirement age. So, if a lucrative job opportunity comes your way, don’t automatically rule it out for fear of permanently losing part of your Social Security income.

3. The salary cap increases

Social Security depends on payroll tax revenue to stay afloat. Each year, a salary cap is established that determines the amount of income that is taxed to fund the program.

In 2025, the salary cap is $176,100, up from $168,600 in 2024. That means high earners will lose more of their pay to Social Security taxes. However, paying more into Social Security could mean ending up with a larger monthly benefit down the road.

And while it can be argued that high incomes don’t need Social Security as much because they earn enough money to finance a retirement planit’s not a given that everyone with a six-figure salary regularly contributes to an IRA or 401(k). Higher monthly benefits in retirement could end up saving higher earners who live in high-cost areas and fail to save as much.

You might assume that Social Security isn’t the kind of thing you need to keep learning about. But in reality, the schedule changes quite a bit in 2025, and that could impact your finances one way or another. So it’s best to keep an eye on Social Security, regardless of your age or stage of life.