Social security is one of the main topics of political debate today. Without substantial change to the program, the Social Security Administration will have to cut benefits for tens of millions of retirees.

With just two months left in 2024, it is unlikely that Congress will be able to make major overhauls of the program by the end of the year. But every American should be aware of changes built into the existing program that could have a big impact on your financial planning for 2025.

Retirees and workers need to keep up to date with the latest changes. If you’re not ready for January 1, these new updates might surprise you. Here are three of the biggest updates to know before the new year.

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1. Recipients will receive a raise

Each year, Social Security adjusts retirement benefits for inflation by instituting a cost of living adjustmentor COLA. The 2025 Social Security COLA is 2.5%, so most beneficiaries should expect to see a small increase in their monthly checks.

The COLA is linked to a subset of the Consumer Price Index called CPI-W, which tracks the cost of a set of goods and services reflecting the spending habits of the average urban wage earner or office worker. The Social Security Administration takes the average increase in the CPI-W during the third quarter to determine the COLA for the following year.

The 2.5% COLA for 2025 is lower than in recent years due to slowing inflation. Yet many older adults continue to feel pressure from the rising cost of goods and services in recent years. Meanwhile, Medicare premiums continue to rise, further straining increases in Social Security benefits.

If you’ve been hoping to get a substantial COLA to help you overcome the higher costs of just about everything these days, it’s time to make a new plan. Determine where you could cut your expenses or how you could earn more.

2. Some workers will have to pay more social security contributions

If you have a high income, you probably won’t have to pay Social Security taxes on your entire income. For 2024, any wages earned above $168,600 are not subject to tax. For 2025, this amount will increase to $176,100.

That means anyone earning more than $176,100 in 2024 and 2025 will have an additional $465 deducted from their pay over the next year. (Your employer will also have to pay an additional $465 in payroll taxes.)

It should also be noted that the increase in wages subject to social security is greater than the cost-of-living adjustment of allowances. This will often be the case because the increase is based on wage inflation rather than price inflation. Wage growth generally outpaces price inflation because living standards generally increase over time. As such, younger workers can expect a larger and larger portion of their salary to become taxable over time.

3. You can earn more while collecting early Social Security benefits

If you work while receiving anticipated Social Security benefits, you may be subject to Social Security Income Test. The test applies to anyone who has not yet reached full retirement age.

The way it works is that if you earn a certain threshold of income during the year while receiving benefits before reaching full retirement age, the Social Security Administration will begin to reduce the amount you receive each month. The reduction amount is $1 for every $2 earned above the threshold in the years before full retirement age. This amount is reduced to $1 for every $3 you earn above the threshold during the year you reach full retirement age.

For 2024, the earnings threshold is $22,320. There is a higher income threshold in the year you reach full retirement age: $59,520. Next year, recipients will be able to earn up to $23,400 or $62,160, respectively, without impacting their Social Security check.

Note that the Social Security Administration will adjust your benefits once you reach full retirement age to account for the amount of benefits withheld due to the earnings test. For example, if it withheld six months of benefits from the time you applied until your full retirement age, it would adjust your benefit as if you delayed your initial application for an additional six months. This can often prove beneficial in the long run.

While not all of these changes will impact everyone, it’s worth taking the time to understand how those that will impact your financial plans. Preparing for changes now could make your life a lot easier in January.