Social Security Won't Just Announce a 2025 COLA This Week. Here Are 2 More Big Changes to Look Out For

It's the week retirees have long been waiting for. At long last, the Social Security Administration (SSA) is gearing up to announce a 2025 cost-of-living adjustment (COLA).

And if you're wondering what's taking so long, the answer is that the SSA needs to wait for September inflation data to become available to arrive at that number. Since that data won't come out until October 10, retirees will be in limbo for a few more days with regard to a 2025 COLA.

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But it's not just next year's COLA that gets announced on October 10. The SSA will be able to offer a few other key updates on 2025 changes. Here are two pieces of information you'll want to look out for.

1. The 2025 earnings-test limits

One nice feature of Social Security is that you're allowed to earn an income and collect benefits at the same time. And once you reach full retirement age, wages from a job won't impact your monthly benefits (other than perhaps, in some cases, boost your earnings history and give your benefits a lift).

But if you're on Social Security and earning money from a job before having reached full retirement age, there's an earnings-test limit you'll be subject to. And the higher it is, the more leeway you get to earn money before having some of your Social Security income withheld.

Currently, the wage cap is $22,320, or $59,520 for those who aren't yet at full retirement age but will get there prior to the end of 2024. In 2025, these limits are likely to rise, so you may be able to earn more without risking withheld benefits.

And to be clear, withheld benefits aren't forfeited. You get the money back at full retirement age. But that doesn't necessarily help your near-term finances if full retirement age is still a few years away.

2. The 2025 wage cap

Workers don't necessarily pay Social Security taxes on all of their income. Rather, a wage cap is established each year that dictates how much income is taxed for that purpose.

In 2024, the wage cap is $168,600, so earnings beyond that point are exempt from Social Security taxes (though to be clear, that doesn't mean higher earnings are exempt from federal and state taxes). For 2025, a higher wage cap will likely be set in accordance with inflation and wage growth.

Now if you're someone collecting Social Security, you might assume that this update isn't so important to you. But actually, it is.

Social Security is facing a revenue crisis that has the potential to result in benefit cuts in roughly a decade's time. A sizable boost in the Social Security wage cap serves the purpose of pumping more money into the program, which is a piece of the puzzle in the context of avoiding benefit cuts.

There's a lot of hype about the upcoming 2025 Social Security COLA announcement. But realize that there's other key information that's set to be shared on October 10. Visit the SSA's website that day either way and read through that news carefully so you know what to expect in the new year.

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