If you’re a Social Security recipient you are probably aware of one big change that will take place in January. You’ll receive a cost of living adjustment (COLA) that will boost your monthly benefit by 2.5%. On average, that will boost the monthly benefit by $48 for retirees and $39 for workers with disabilities.
But there are other changes with the start of the new year. Medicare premiums are going up, as they do nearly every year, rising from $174.70 per month to $185. That extra charge will erode some of the Social Security payment increase.
Because the COLA is only 2.5% for 2025, most recipients who are also on Medicare might not notice much of an increase.
Balancing that not-so-good news is some better news for Social Security recipients who have not reached full retirement age and who are still working. Starting in 2025, these recipients can earn more by working before it begins to reduce their benefits.
Currently, recipients who haven’t reached the full retirement age can earn $22,320 before the penalty reduces their monthly benefit. Starting in 2025, they can earn up to $23,400 before being assessed a $1 reduction for every $2 over the limit.
Higher maximum benefit
Also in 2025, some recipients could receive a higher maximum benefit. The maximum payment rises from $4,873 per month to $5,108 per month.
To be eligible, recipients must have worked at least 35 years, with the benefit based on the years when you made the most money. Recipients will also have to have consistently earned the maximum taxable limit. Next year, that limit is $176,100 per year.
To get the maximum benefit you must begin drawing Social Security no earlier than age 70. Waiting as long as possible usually pays off.
The maximum benefit for those who began drawing at age 62 will be $2,831 starting next year. Those who waited until age 67 can receive a maximum of $4,043 a month.
