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.
