Make This One Social Security Move in 2025, Essential Advice for Every Worker

Planning for retirement is like preparing for a long road trip—without a solid plan, you could run out of money too soon. One of the most important financial decisions you’ll make is when and how to claim Social Security benefits. In 2025, several key changes to Social Security are coming, and if you don’t act wisely, you might leave thousands of dollars on the table. Whether you’re close to retirement or just starting to think about it, there is one crucial move you should make this year to maximize your Social Security benefits. Let’s dive into what’s changing, why it matters, and what you should do next.

Understanding the 2025 Social Security Changes

The Social Security program undergoes adjustments every year to keep up with inflation, wage growth, and legislative changes. In 2025, several updates will impact retirees, workers, and those planning their financial future. Here are the major changes:

Cost-of-Living Adjustment (COLA) – Keeping Up with Inflation

The Cost-of-Living Adjustment (COLA) ensures that Social Security benefits keep pace with inflation. For 2025, the COLA increase is 2.5%.

• Example: If your Social Security check was $1,927 per month in 2024, it will rise to $1,976 in 2025.
• While this increase provides some relief, inflation continues to impact retirees’ purchasing power.
• Planning tip: Consider budgeting for rising expenses and adjusting savings accordingly.

Full Retirement Age (FRA) Increases – Adjusting Claiming Strategies

Your Full Retirement Age (FRA) is the age at which you can claim full Social Security benefits. In 2025, FRA increases to 66 years and 10 months for individuals born in 1959.

• Claiming benefits before FRA results in a permanent reduction in monthly payments.
• Delaying benefits past FRA increases payouts by approximately 8% per year until age 70.
• Example: If your FRA benefit is $2,000 per month, claiming at 62 could reduce it to $1,400, while delaying until 70 could increase it to $2,640 per month.

Repeal of WEP & GPO – Higher Benefits for Public Sector Retirees

The elimination of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) is a major change benefiting public sector employees.

• WEP previously reduced Social Security benefits for workers with public pensions.
• GPO limited spousal and survivor benefits for those receiving non-covered government pensions.
• With these provisions repealed, teachers, police officers, and government employees may see an increase in their benefits.

Higher Earnings Subject to Social Security Taxes

The maximum taxable earnings cap is increasing from $168,600 to $176,100 in 2025.

• High earners will contribute more to Social Security.
• The maximum possible benefit for top earners will also rise.
• If you’re a high-income earner, consider tax-efficient retirement strategies like Roth IRA conversions.

Increased Earnings Limit Before Social Security Penalty

For individuals collecting Social Security before FRA while still working, there is an income limit before benefits are reduced. In 2025, this earnings limit rises to $22,320.

• If earnings exceed this limit, Social Security reduces benefits by $1 for every $2 earned over the threshold.
• Once FRA is reached, there is no penalty, and you can earn as much as you want.

Make This One Social Security Move in 2025

With all these changes, the smartest financial move you can make in 2025 is re-evaluating your Social Security claiming strategy. Taking the time to assess your benefits and optimize your claiming approach can significantly impact your financial future. Here’s how:

1. Check Your Full Retirement Age (FRA) and Benefit Estimates

• Log into your My Social Security account at SSA.gov to see your estimated benefits.
• Compare how claiming early versus delaying benefits affects your monthly payments.

2. Consider Delaying Benefits for a Higher Payout

• If you can afford to delay, waiting until age 70 can increase your Social Security benefits substantially.
• Calculate the break-even point to determine if delaying makes sense for you.

3. Optimize Spousal and Survivor Benefits

• Spouses can claim up to 50% of their partner’s benefit if it’s higher than their own.
• Widows and widowers can receive up to 100% of their deceased spouse’s benefit.
• Divorced individuals (married for at least 10 years) may also qualify for spousal benefits.

4. Reduce Taxation on Social Security Income

Did you know that up to 85% of your Social Security benefits can be subject to federal income tax? Strategies to reduce taxation include:

• Keeping total income (Social Security + pensions + investments) below tax thresholds.
• Using Roth IRAs or tax-free municipal bonds to control taxable income.
• Withdrawing from tax-deferred accounts strategically to minimize taxable Social Security benefits.

5. Use the SSA Retirement Estimator to Plan Your Benefits

• Visit the Social Security Estimator tool at SSA.gov.
• Enter your details to see how different claiming ages impact your benefits.

6. Speak to a Financial Advisor for a Personalized Plan

• A licensed retirement planner can help optimize your Social Security claiming strategy.
• They can suggest tax-efficient withdrawal strategies to complement Social Security income.