The Social Security Administration (SSA) has announced new thresholds for the earnings test in 2025, alongside updates to the payment schedule for retirees and Supplemental Security Income (SSI) beneficiaries. These changes aim to adjust benefit calculations and provide clarity for those receiving Social Security payments.
Higher Earnings Limit for 2025: What You Need to Know
This Article Includes
Starting in January 2025, Social Security recipients who have not yet reached their Full Retirement Age (FRA) will face a higher earnings threshold. Previously set at $22,320 per year ($1,860 per month) for 2024, the limit will increase to $23,400 annually ($1,950 per month).
This adjustment is critical for retirees who choose to continue working while claiming benefits. If your income exceeds the threshold, the SSA will reduce your monthly benefits. However, investment income is excluded from this calculation, as the earnings test focuses only on income from labor, including wages and self-employment earnings.
Who Does the Earnings Test Affect?
The Social Security Earnings Test applies to beneficiaries who claim their benefits before reaching their FRA. Once a recipient reaches their FRA, they can earn unlimited income without seeing any reductions in their Social Security payments.
It’s important to note that even independent contractors are subject to this rule if their labor-generated income surpasses the limit. For those planning to continue working after FRA, it’s worth understanding that while earnings won’t reduce benefits, the SSA may still tax benefits if your income exceeds specific thresholds.
January 2025 Social Security Payment Schedule
To ensure beneficiaries know when to expect their payments, the SSA has provided the following schedule for January 2025:
- January 8: Payments for individuals born between the 1st and 10th of any month.
- January 15: Payments for individuals born between the 11th and 20th.
- January 22: Payments for individuals born between the 21st and 31st.
Additionally, those who have been receiving Social Security benefits since before May 1997 will receive their January payment early, on December 3, 2024.
Supplemental Security Income (SSI) Payments
SSI recipients will also receive an early payment for January 2025 due to the public holiday on January 1. These beneficiaries will see their deposits arrive on December 31, 2024.
What Happens Beyond Full Retirement Age?
While the earnings test no longer applies after reaching FRA, retirees should remain mindful of the potential taxation of their benefits. Depending on overall income levels, the SSA may tax a portion of the benefits, even for high earners post-FRA.
Planning for 2025 and Beyond
The SSA’s updated rules emphasize the importance of understanding how earned income interacts with Social Security benefits. By keeping the new earnings thresholds and payment schedules in mind, beneficiaries can better plan their financial decisions for the coming year.
For those nearing FRA, knowing when the earnings test no longer applies can provide opportunities to maximize both work income and benefits. As always, consulting a financial advisor or reviewing official SSA guidelines can help tailor decisions to your unique circumstances.
