If you’re married or divorced and relying on Social Security, it’s essential to stay updated on changes that could impact your benefits in 2025. Whether you’re already collecting Social Security or planning to start next year, here’s a breakdown of what to expect and how it could affect your finances.
1. COLA Adjustment: A Smaller Raise for 2025
The cost-of-living adjustment (COLA) for Social Security benefits in 2025 will be 2.5%. While this increase is smaller compared to recent years (8.7% in 2023 and 5.9% in 2022), it reflects slowing inflation.
For those receiving spousal or divorce benefits, the increase may feel modest. The average spousal benefit of $909 per month will see a raise of about $23. Though it might not seem like much, smaller COLA adjustments often indicate slower inflation, which can stabilize everyday expenses.
Still, for retirees counting on a higher adjustment to ease financial stress, this smaller COLA might feel underwhelming.
2. Higher Medicare Premiums Mean Less Take-Home Benefits
If you’re enrolled in Medicare, expect your premiums to go up in 2025. Medicare Part B premiums will rise to $185 per month, an increase of $10.30.
Since most retirees have Medicare premiums deducted directly from their Social Security checks, this hike means less of the COLA increase will actually make it into your pocket. For example, if your Social Security spousal benefit goes up by $23, the premium increase will reduce that to just $12.70.
For those on a tight budget, this change might feel significant, so it’s worth planning to manage monthly expenses.
3. Earnings Test Limits Are Increasing
If you’re working while collecting Social Security, your benefits may be affected by the retirement earnings test. This applies to anyone earning a salary while under full retirement age (FRA).
In 2025, the earnings limits will increase:
- If you reach your FRA in 2025, you can earn up to $62,160 annually before benefits are reduced. This is up from $59,520 in 2024.
- If you won’t reach your FRA in 2025, you can earn up to $23,400, up from $22,320 in 2024.
For every $2 or $3 you earn above these limits, $1 will be deducted from your Social Security benefits. Although this sounds like a setback, these withheld amounts will be recalculated and returned to you once you hit full retirement age.
For those receiving smaller spousal or divorce benefits, the earnings test can significantly impact how much you take home each month. But with the increased limits, you can earn more in 2025 before reductions apply.
Why These Changes Matter
Spousal and divorce benefits provide essential support for many retirees. While the 2025 adjustments might seem minor on their own, the combined effect of a smaller COLA, higher Medicare premiums, and earnings test limits could make a noticeable difference in your budget.
By staying informed, you can better prepare for these changes and adjust your financial plans as needed.
How to Maximize Your Benefits
Many retirees miss out on additional Social Security benefits simply because they don’t know how to maximize their payouts. For example, by delaying your claim until full retirement age or beyond, you could significantly boost your monthly check.
If you’re divorced, you might also qualify for spousal benefits based on your ex-spouse’s earnings record. These benefits are available even if your ex has remarried as long as you meet the eligibility criteria.
Plan for 2025
Changes to Social Security in 2025 will impact everyone differently, but understanding how they work can help you make informed decisions. Whether it’s budgeting for higher Medicare premiums, adjusting your work income to stay within the earnings test limits, or finding ways to maximize your benefits, being proactive is key.
With the right planning, you can navigate these changes and ensure your retirement is as financially secure as possible.
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.