SSDI Benefits in 2025

By Michelle Shvarts
Principal Attorney

In 2025, Social Security will undergo several key adjustments. One major change is a 2.5 percent increase in benefits due to the cost-of-living adjustment. Other significant updates include the start of a gradual increase in the full retirement age and an increase in the maximum amount of earnings subject to Social Security tax.

Cost-of-Living Adjustment on Benefits

Social Security benefit amounts will increase by 2.5 percent in 2025 as a result of the annual cost-of-living adjustment (COLA). This adjustment aims to prevent inflation from eroding the purchasing power of Social Security benefits. For example, the average monthly payment for retired workers will rise from $1,927 to $1,976 in 2025. Monthly Supplemental Security Income (SSI) payments will also increase from $943 to $967 for individuals and from $1,415 to $1,450 for couples in 2025.

Full Retirement Age Adjustments

The full retirement age (FRA) is increasing in 2025. This change means Americans born in different years will have to wait longer to receive full Social Security benefits. For example, those born in 1958 will reach full retirement age at 66 and 8 months, while those born in 1959 will have to wait until they are 66 and 10 months old. The adjustment can affect benefits long-term since claiming benefits before reaching full retirement age results in reduced monthly payments. 

Changes to Social Security Tax and Maximum Taxable Earnings

In 2025, the Social Security tax rates will remain the same, but the maximum taxable earnings will increase. Specifically, the cap on earnings subject to Social Security tax will rise from $168,600 to $176,100. This change means that workers earning above the old cap will pay Social Security taxes on a larger portion of their income. The goal of this adjustment is to fund the Social Security program so it remains solvent and can continue to pay out benefits.

Retirement Earnings Test and Exempt Amounts

The Social Security retirement earnings test sets limits on how much beneficiaries below full retirement age can earn before their benefits get reduced. In 2025, the earnings limit for those who have not yet reached full retirement age will increase to $23,400 per year. For those reaching full retirement age in 2025, the limit will be $62,160. Earnings above these amounts will cause benefits to be reduced by $1 for every $2 or $3 earned over the limit, depending on the specific threshold. 

How a Lawyer Can Help You Prepare for These Changes

A lawyer can be a valuable asset in adjusting to the upcoming changes to Social Security in 2025. As the rules around retirement age, benefits, and taxation become more complex, a lawyer can provide clear guidance and strategic planning assistance. For instance, as the FRA increases, a lawyer can help you determine the optimal time to claim Social Security benefits to maximize your lifetime payments. This is especially important if you’re considering early retirement or might need to adjust your retirement plans based on the new FRA.

If you’re still working, a lawyer can assist in assessing the impact of the higher taxable earnings cap on your financial planning. They can offer advice on how to structure income and investments to minimize the tax burden while optimizing future Social Security benefits. If you’re affected by the retirement earnings test, a lawyer can help you plan how much work you can undertake without adversely affecting your benefits. This kind of planning is crucial for those looking to balance work and retirement income as they get older.

Contact a Social Security Attorney Now

Do you have questions about how the 2025 Social Security updates could impact you? Reach out to Disability Advocates Group today for a free initial consultation. Our knowledgeable team is here to assist you with understanding your benefits and planning effectively for the future.

About the Author
Ms. Shvarts is the managing attorney for Disability Advocates Group. She opened Disability Advocates Group to assist individuals who became disabled and unable to work to obtain the benefits they need and deserve.  Ms. Shvarts and the rest of the team at Disability Advocates Group are dedicated to assisting individuals obtain Social Security Disability Benefits (SSDI) and Supplemental Security Income (SSI) benefits.