
4 Social Security Facts Retirees Should Know in 2025
4 Social Security Facts Retirees Should Know in 2025
Since its inception in 1935, Social Security has served as the cornerstone of the American retirement strategy. Developed during the Great Depression, the Social Security Act offered assistance to millions of elderly and retired citizens by providing financial support, aid for dependent children, and insurance for disabled and unemployed individuals.1
As of 2025, more than 72 million Americans—and nearly 90% of Americans aged 65 or older—receive some form of Social Security, with the average benefit amount equating to nearly a third of the retirees’ income.2,3
In this article, we’ll explore key changes to Social Security in 2025 and outline four essential facts that every retiree needs to know.
Key Changes to Social Security in 2025
- Social Security recipients received a 2.5% increase in payments for 2025. The Social Security Administration (SSA) attempts to match benefits to inflation.
- The maximum taxable earnings limit rose from $168,600 to $176,100. Earnings above this limit are not taxed. Social Security tax remains at 6.2%.
- Earning limits increased. Social Security recipients who continue to work in retirement will see their benefits temporarily reduced.
Fact #1: Your Benefit Depends on Your Retirement Age
Your benefit amount will depend on the age that you claim benefits. Full retirement age—the age at which you can claim 100% of your calculated monthly benefit amount—is 67 for those born in 1960 or later. Benefits increase by 8% per year for those who decide to delay collecting benefits past their full retirement age.4,5
The earliest you can claim benefits is at 62, but the SSA will reduce your benefit amount by a certain percentage for each month prior to your full retirement age. For example, if you were born in 1960 and retire at 62, you’ll receive 70% of your monthly benefits. If you retire at 65, that number goes up 86.7%.6
Fact #2: You Can Still Work and Collect Social Security
The SSA determines your benefit amount based on the projected income levels you report at the beginning of the year and verifies your income using your tax return information. The SSA will then set an outside earning limit for beneficiaries who continue to work in retirement.
In 2025, the limit on outside earnings is $23,400. Exceeding this limit will reduce your benefit amount. The SSA deducts $1 in benefits for every $2 you earn above the income limit if you continue to work while receiving benefits before reaching your full retirement age. In the year you reach your full retirement age, $1 is subtracted for every $3 you earn over $62,160, but this deduction only applies to months prior to your birthday. Once you reach full retirement age, there is no penalty for outside earnings.6
Why Should I Wait to Collect Social Security?7
- You plan to continue working and expect to earn more than the $23,400 annual income limit.
- You have little savings, are single, and healthy.
- Your spouse is working. A higher combined income means a larger portion of your benefits may be taxed.
- You expect to live a long life. The average life expectancy of Americans who reach age 65 today is about 87 for women and 84 for men.8
- Your spouse’s benefit is smaller than yours or your spouse is considerably younger than you.
Why Should I Not Wait to Collect Social Security?9
- You don’t expect to earn income above the annual limit of $23,400 for 2025.
- You have health problems or a below-average life expectancy.
- Your spouse’s benefits are greater than yours.
- You lack other income sources and have no opportunities to earn money.
Fact #3: Your Benefits May Be Taxed
Up to 85% of your Social Security benefits can be taxed if your combined income—the sum of your adjusted gross income, nontaxable interest, and half of your Social Security benefits—exceeds the annual limit set by the SSA. In 2025, the combined income limit is $25,000 for individuals and $32,000 for joint filers who are married.10
Fact #4: Your Marital Status May Affect Your Benefits
Social Security benefits for married couples work a bit differently. Here are a few important facts to consider:
- The SSA does not penalize married couples. Spouses are entitled to benefits based on their own work histories.
- If you’re only eligible to receive one of two benefits, you will receive the larger amount. Lower-paid spouses can choose to receive full benefits based on their own work histories or 50% of their partners’ benefit amount.11
- Divorced spouses married for at least 10 years are eligible for higher benefits based on their partners’ work history.12
- Widowed Social Security recipients are eligible to receive additional widow benefits. Widows may receive 71.5-100% of their spouses’ benefits, depending on their specific circumstances.13
Conclusion
Understanding how to optimize your Social Security benefits is a key component when it comes to planning for retirement. Our goal as fiduciaries is to help you make more informed decisions about when and how to draw your benefits, as well as navigate the impact these choices can have on your long-term financial well-being.
Working with an advisor can help you develop a personalized plan that aligns with your lifestyle and retirement goals, so feel free to reach out if you have questions about your Social Security benefits or personal retirement strategy.
1SSA.gov, 2024
2SSA.gov, 2024
3Census.gov, 2024
4SSA.gov, 2024
5SSA.gov, 2024
6SSA.gov, 2024
7SSA.gov, 2024
8SSA.gov, 2024
9SSA.gov, 2024
10SSA.gov, 2024
11SSA.gov, 2024
12SSA.gov, 2024
13SSA.gov, 2024
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