Social Security's 2.5% cost-of-living adjustment (COLA) for 2025 was disappointing for many seniors. It added just $49 to the average monthly check, and that's not enough for a lot of families. Most seniors will have to look to their savings or other government benefits if their Social Security benefits don't go far enough.
But there's one group of seniors that could get an extra boost this year. The difference probably won't be life-changing, but even a little extra cash could make life more comfortable in 2025.
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Social Security earnings test limits went up
You become eligible for Social Security at 62, but there are a few drawbacks to claiming under your full retirement age (FRA) -- 66 to 67, depending on your birth year. The biggest downside is that the government shrinks your checks for every month you claim under your FRA. You can reduce your monthly benefit by up to 30% if you apply immediately at 62.
Those who continue to work while claiming Social Security under their FRA are also in danger of running into the earnings test. This is where the Social Security Administration withholds money from your benefits if you earn more than a certain amount during the year.
In 2024, you lost $1 from your checks for every $2 you earned over $22,320 if you were under your FRA all year. If you reached your FRA in 2024, you only lost $1 for every $3 you earned over $59,520 if you hit this amount before your birthday.
These limits climbed to $23,400 and $62,160, respectively, for 2025. That means workers claiming Social Security under their FRA will be able to make more money before the Social Security Administration starts holding anything back from their checks. Those earning more than $23,400 who are under their FRA in both years will hold onto an extra $540 this year compared to 2024.
Those reaching FRA could see even bigger gains
Money withheld due to the earnings test isn't gone forever. The government recalculates your benefit at your FRA and gives it a boost if it previously withheld money due to the earnings test. So those reaching their FRA this year -- many born in 1958 and a few born in 1959 -- could potentially see a larger boost at this time. They also won't have any money withheld due to the earnings test after reaching their FRA, regardless of how much income they earn from other sources.
It's impossible to say what kind of increase you would expect since it depends on how much the government withheld from you in past years. If you're curious, contact the Social Security Administration for personalized advice. You can reach out online, by phone, or by scheduling an appointment at your local Social Security office.
If you're not reaching your FRA this year, you should know that earnings test limits generally go up annually. So it's possible that next year, you may have even less withheld due to these limits. It's something to keep in mind when preparing your budget for future years.
