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3 Things About Social Security That Won't Change In 2025 But May Surprise Many Retirees
Social Security is an important piece of nearly every retiree's budget. Six in ten retirees say their monthly checks are a major source of income, while another three say they play at least a minor role in their finances, according to this year's edition of an annual Gallup poll. But as most retirees know, there are a lot of changes that affect the program each year.
The annual cost-of-living adjustment (COLAs) and other inflation-related adjustments as well as new earnings test limits are two things that could affect how much retirees receive each month. But for all the changes that happen each year, a few things remain constant. And despite the fact that they don't change, it could still surprise many retirees.
Here are three things about Social Security that will remain surprisingly constant in 2025.
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1. The income threshold for taxing Social Security
Congress passed a couple of reforms for Social Security in the 1980s and 1990s that made some benefits taxable if your income exceeds a certain amount. And the amounts haven't been adjusted for inflation since.
Social Security uses a metric called combined income to determine what percentage, if any, of your Social Security benefits are taxable. Combined income is equal to the sum of half of your Social Security benefit, your adjusted gross income, and any nontaxable interest income. Up to 85% of your Social Security benefit becomes taxable at certain combined income thresholds based on the following table.
| Taxable Percentage of Social Security | Combined Income, individual | Combined income, joint filing |
|---|---|---|
| 0% | Less than $25,000 | Less than $32,000 |
| Up to 50% | Between $25,000 and $34,000 | Between $32,000 and $44,000 |
| Up to 85% | More than $34,000 | More than $44,000 |
Table by author, Source: Social Security Administration.
Those thresholds are extremely low. The average Social Security retirement benefit in November was $1,925 per month, or $23,100 per year. Monthly checks will get a 2.5% boost from the COLA next year. Even a relatively small withdrawal from a retirement account for a couple will push some of their Social Security income into taxable territory.
2. Your earnings record adjustments (if you're over 60)
When the Social Security Administration calculates your benefit, it adjusts your past earnings for inflation. That puts the earnings from your job in your 20s and 30s on par with your earnings in your 50s.
But it stops adjusting earnings the year you turn 60. That's when your past adjusted-earnings record gets set in stone as far as inflation is concerned. Any earnings in the year you turn 60 or later don't get adjusted for inflation at all.
This can encourage more people to work in their 60s since your salary will likely keep up with inflation. Working in your 60s can have a tremendous boost on your ultimate Social Security check, especially considering many people have more earning power later in their career than in the early days.
Unfortunately, it means anyone who was forced to (or chose to) retire early won't receive inflation adjustments for their earnings once they reach 60. That can leave them with relatively meager Social Security checks.
Although the COLA will still boost their benefit (whether they have claimed it already or not), they won't get the added benefit of earnings adjustments that people continuing to work receive from natural wage increases. If you're on the fence about retiring, be sure to check your Social Security earnings history to make sure your benefit will meet your needs, because it's not going to change if you're already over 60.
3. Your full retirement age
Full retirement age (FRA) is the age at which you're eligible to receive your full retirement benefit. You can claim anytime starting at age 62, but if you claim before reaching your FRA, you'll receive less than your full benefit.
You may have news articles about how the FRA is changing, but here's the fact: Your own personal FRA has been set in stone since 1983.
The Social Security program is currently undergoing a transition period due to a law passed over 40 years ago. The age of people reaching FRA in a given year has steadily increased since 2020. For most of 2025, people will reach it at 66 years and 8 months. But some people will reach it at 66 years and 10 months in late 2025.
Here's what's going on: The 1983 Social Security reform bill increased the full retirement age from 65 to 67. Anyone born before 1938 still reached FRA at 65. Those born between 1938 and 1943 reached FRA between 65 and 66 in the mid-2000s. Now we're undergoing a similar transition for those born between 1955 and 1960.
Those born between 1943 and 1954 reached FRA at 66. Your FRA increases by 2 months for every year you were born after 1954 until maxing out at 67 for anyone born in 1960 or later.
Understanding your FRA can have a big effect on when you decide to claim Social Security. So it's important to know it's not changing every year. And if you're already in your 60s, it's unlikely any future changes to the program will affect your full retirement age.
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