Social Security has completely changed in 2024, and there’s still more to come – Here’s everything you need to know

Economic shifts and legislative updates continually influence Social Security, and 2024 has brought several impactful changes, from adjustments in cost-of-living allowances (COLA) to updates in retirement age and repayment processes for overpayments. These modifications affect millions of Americans directly, making it essential to understand the most recent changes, as well as those expected to come in 2025.

Key Social Security Changes Expected in 2025

Cost-of-Living Adjustment (COLA) Projections

Each year, the Social Security Administration (SSA) sets a cost-of-living adjustment (COLA) based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). After a record 8.7% increase in 2023 due to high inflation, COLA in 2024 was more modest at 3.2%. Predictions for 2025 suggest an even lower increase, with estimates around 2.57%, marking the smallest adjustment in recent years. Though smaller, these adjustments remain essential for beneficiaries, helping offset inflation and maintain purchasing power.

Increase in Maximum Taxable Earnings

The Social Security wage base, or the maximum earnings subject to Social Security taxes, is reviewed annually to reflect changes in the national average wage. In 2024, this threshold rose by 5.2%, increasing from $160,200 to $168,600. Earnings above this limit are not taxed by Social Security, meaning that only income up to this threshold contributes to Social Security funding. This annual adjustment supports the program’s sustainability by reflecting general wage growth.

Year	Maximum Taxable Earnings	Percentage Increase
2023	$160,200	–
2024	$168,600	5.2%
2025 (est.)	Likely increase	To be announced

Changes in Full Retirement Age (FRA)

The full retirement age (FRA) represents the age at which beneficiaries can claim their full Social Security benefits. While benefits are available as early as age 62, claiming early results in reduced benefits. For individuals born between 1943 and 1954, the FRA is set at 66, while those born after 1954 experience a gradual increase. For example, individuals born from 1955 to 1959 have an FRA between 66 and 67, and those born in 1960 or later have an FRA of 67. This incremental increase addresses financial pressures on the Social Security system, given the growing retiree population compared to the workforce supporting it.

Expiration of Spousal Benefits Switching Option

Until recently, couples could maximize their Social Security benefits through a “restricted application” strategy, allowing them to claim spousal benefits while delaying their own. However, the Bipartisan Budget Act of 2015 set an end date for this option. As of January 1, 2024, only individuals born before January 1, 1954, can continue using this strategy. This change limits many retirees’ flexibility in how they claim benefits, marking the end of an income-maximization approach once widely used by couples.

Updated Procedures for Overpayments

Overpayment issues occur when the SSA mistakenly pays beneficiaries more than they are entitled to. Historically, the SSA required beneficiaries to repay the full overpayment amount, often deducting it entirely from future payments. However, in response to widespread criticism, new regulations in 2024 reduced the recoupment rate to 10% per payment, softening the financial impact on recipients. Additionally, beneficiaries now have more time to repay, and the appeals process has been simplified, making it easier to contest or address overpayments. This change alleviates the burden on recipients who may have faced sudden financial hardship due to the SSA’s previous repayment policies.

How These Changes Impact Social Security Beneficiaries

These updates underscore Social Security’s adaptability to economic realities and demographic shifts. For instance, the anticipated lower COLA in 2025 reflects a return to pre-pandemic inflation levels, while the gradual increase in the taxable wage base aligns with wage growth, ensuring that Social Security continues to receive adequate funding. Meanwhile, adjustments in FRA and changes to benefit-claiming strategies indicate the SSA’s efforts to maintain the system’s sustainability over time.