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

Planning for retirement is like preparing for a long journey. Without a solid plan, you could run out of money sooner than expected. One of the most important financial decisions you will make is when and how to claim Social Security benefits. In 2025, several changes are coming to Social Security, and making the right move now could help you secure thousands of extra dollars. Whether you are nearing retirement or just beginning to think about it, there is one crucial step you must take this year to maximize your Social Security benefits. Let’s explore the upcoming changes, their impact, and the smartest move you should make.

Understanding the Key Social Security Changes in 2025

Before making any financial decision, it is important to understand the changes coming to Social Security in 2025. Here are some of the major updates:

Cost-of-Living Adjustment (COLA) – A 2.5% Increase

Social Security benefits automatically adjust for inflation through the Cost-of-Living Adjustment (COLA). In 2025, the COLA increase is 2.5%, ensuring that retirees can maintain their purchasing power.

Example:

• If you received $1,927 per month in 2024, your new monthly benefit will be approximately $1,976 in 2025.

This increase may not seem like much, but over time, it adds up and helps retirees keep up with inflation.

Full Retirement Age (FRA) Increases to 66 Years and 10 Months

The Full Retirement Age (FRA) is the age when you can claim 100% of your benefits without a penalty.

• In 2025, the FRA increases to 66 years and 10 months for those born in 1959.
• If you claim benefits before reaching FRA, your monthly check will be permanently reduced.
• If you delay benefits until age 70, you get an 8% increase per year.

Example:

• If your FRA benefit is $2,000/month, claiming at age 62 could reduce it to $1,400/month, while delaying until age 70 could increase it to $2,640/month.

Repeal of WEP and GPO – A Boost for Public Sector Retirees

One of the biggest changes in 2025 is the repeal of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).

• WEP: Previously reduced Social Security benefits for those receiving a public pension.
• GPO: Reduced spousal and survivor benefits for retirees with non-covered government pensions.
• With the repeal of these provisions, teachers, police officers, and other public sector employees will now see an increase in their Social Security benefits.

Maximum Taxable Earnings Increase to $176,100

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

• This means high earners will pay more into the Social Security system.
• The maximum benefit for high earners will also increase.

Tip: If you are a high earner, consider alternative retirement savings strategies like Roth IRAs to reduce taxable income in the future.

Higher Earnings Limit Before Social Security Penalty

If you start collecting Social Security before reaching FRA and continue working, your benefits may be reduced if your income exceeds a certain limit.

• The new earnings limit in 2025 is $22,320.
• If you earn above this, Social Security reduces your benefits by $1 for every $2 earned.
• Once you reach FRA, you can earn as much as you want without penalties.

The One Social Security Move You Must Make in 2025

With all these changes, the best move you can make is to re-evaluate your Social Security claiming strategy. Here’s how you can do it:

1. Check Your Full Retirement Age and Benefit Estimates

• Log into My Social Security to check your FRA.
• Compare the benefits of claiming early vs. delaying benefits.
• Understand how changes in 2025 will impact your future payments.

2. Consider Delaying Benefits for a Higher Payout

• Each year you delay benefits after FRA, your monthly payout increases by 8%.
• Delaying until age 70 maximizes your benefits.
• If you are in good health and have other income sources, waiting can lead to much higher lifetime benefits.

3. Optimize Spousal and Survivor Benefits

• If you are married, divorced, or widowed, explore spousal and survivor benefits.
• A spouse can receive up to 50% of their partner’s benefit.
• A widow(er) can receive 100% of their late spouse’s benefit.

4. Reduce Taxation on Social Security Income

Did you know that up to 85% of your Social Security income can be taxed? To minimize taxes:

• Keep total income (Social Security + pensions + investments) below tax thresholds.
• Consider Roth IRA conversions to reduce taxable income in retirement.
• Withdraw from tax-efficient investment accounts first.

5. Use the Social Security Administration (SSA) Retirement Estimator

• Visit Social Security Estimator online.
• Enter your details to see how much you’ll receive at different claiming ages.
• Use this tool to adjust your retirement plan accordingly.

6. Speak to a Financial Advisor for a Personalized Plan

A licensed retirement planner can help you:

• Optimize your claiming strategy.
• Minimize taxes on your Social Security income.
• Plan for long-term financial security.