Federal officials announced that Social Security recipients will receive a 2.5% increase in benefits this year, as well as other key changes to the program affecting retirement age, taxable earnings, and public sector workers.
The cost-of-living adjustment (COLA) became effective in January, increasing the average monthly retirement benefit from $1,927 to $1,976. The increase is intended to help beneficiaries keep up with inflation, but some advocacy groups argue that it falls short given rising living costs.
Other changes include raising the full retirement age (FRA) to 66 years and 10 months for those born in 1959, which continues the gradual transition to a FRA of 67 for those born in 1960 or later.
Retirees who wait longer than their FRA to claim Social Security can receive higher monthly benefits until they reach age 70.
“The Social Security adjustments for 2025 reflect our commitment to maintaining the program’s long-term stability while ensuring benefits remain fair and responsive to economic conditions,” according to a statement from the agency.
The repeal of the Windfall Elimination Provision (WEP) and Government Pension Offset marked a significant policy shift, reducing benefits for millions of public sector workers, including teachers and law enforcement officers.
The Social Security Fairness Act, signed into law in January, restores full benefits for those affected and includes retroactive adjustments beginning in 2024.
Workers who receive Social Security benefits before reaching full retirement age will also face changes in earnings limits.
The cap was raised to $23,400, so those earning more than that amount may face temporary benefit reductions. Meanwhile, the maximum taxable earnings limit increased to $176,100, raising the amount of income subject to Social Security payroll taxes.
In addition, eligibility for Achieving a Better Life Experience accounts, which allow people with disabilities to save and invest without jeopardizing federal benefits, will be expanded in 2026.
The qualifying age for disabilities will rise from 26 to 46, potentially benefiting an additional 6 million Americans.
These changes come as policymakers continue to debate Social Security’s long-term financial stability, with some lawmakers advocating for additional reforms to address anticipated funding shortfalls.
