The 2025 Social Security COLA Is Out. Here Are More Numbers You Need to Know.

The Social Security Administration announced its annual cost-of-living adjustment last week, granting beneficiaries a 2.5% raise for 2025. With this adjustment, the average projected retirement benefit for 2025 is $1,976.

Though the COLA tends to get the most attention, the SSA also makes other key updates each fall that financial advisors and their clients need to know as they set budgets and project retirement income. These are summarized in an SSA fact sheet.

Among the more meaningful changes is an increase to the FICA wage base, which will increase from $168,600 for 2024 to $176,100 for 2025. The Social Security wage base — the amount of worker pay that is subject to a Social Security payroll tax — is adjusted each year based on the national average wage index. The 12.4% tax rate is split between employer and employee.

For 2025, the earned income needed to obtain one benefit credit is $1,810, up from $1,730 this year. Workers can earn up to four credits per year, meaning they will need to earn $7,240 to receive the maximum four credits in 2025.

The retirement earnings test limit has also been increased from $22,320 to $23,400 in 2025 — or $1,950 per month. This is the amount of work-related income a person can have while claiming benefits before full retirement age without facing benefit reductions.

A person who reaches full retirement age, however, can earn $62,160 (or $5,180 a month) before reductions kick in for 2025. This is up from $59,520 this year.

The formula for determining the 2025 primary insurance amount (PIA) remains the same. Certain dollar amounts in the formula are sometimes called “bend points” because the formula, when graphed, appears as a series of line segments joined at these amounts. For 2025, the two primary bend points are $1,226 and $7,391.

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