Retirement in the United States is going through a period of crucial changes. The Social Security Administration (SSA) issued a warning that put many future beneficiaries on alert: there will be groups of people who will be left out of the system if they do not meet certain fundamental requirements. At the same time, updates were announced that directly impact the monthly amounts and the way in which workers will be able to secure a decent pension at retirement age.
In this scenario, the recent signing of the Social Security Fairness Act on January 5, 2025, which eliminates the benefit reduction applicable to those who receive public pensions for jobs not covered by Social Security, takes on special relevance. While this law promises to improve the situation for many, the SSA clarified that it is evaluating how to implement it and that, for the time being, those with prior partially offset claims should not take any additional steps.
Below, we review the most important points to know when planning for retirement, from labor credits to the age at which it is advisable to start the procedures, as well as the cost of living increases and the maximum amounts that will be paid this year.
Labor credits: the key requirement for accessing retirement benefits
To qualify for Social Security retirement benefits in the United States, it is essential to have worked for at least 10 years. This period translates into 40 credits, which are the prerequisite for receiving monthly payments under the program.
In 2025, the SSA establishes that each credit is granted for income of USD 1,810, and that a worker can earn up to 4 credits per year. Thus, with an annual income of USD 7,240, the maximum of 4 credits per year is reached, so that the required 40 credits can be completed after a decade of employment.
One of the benefits of this system is that the credits do not expire. This means that if a person interrupts his or her working career for any reason and then returns to work, he or she can continue adding credits until the required credits are reached.
Who is excluded?
Despite the flexibility offered by the system, the SSA warned that those who do not meet the necessary 40 credits will not be able to receive the pension. This is the group of people who, according to the entity, will be excluded from Social Security benefits, turning the requirement into an “excluding” factor.
Changes in the retirement age: when is it convenient to apply for benefits?
The law allows future beneficiaries to apply for Social Security retirement payments between the ages of 62 and 70. However, the age chosen to start collecting directly influences the amount received monthly. Generally speaking:
- Applying for benefits at age 62 means receiving a reduced amount, but for a longer period.
- Delaying the application until age 70 guarantees higher monthly payments, but for a potentially shorter period of time.
This decision margin offers the possibility of adjusting the retirement age according to each individual’s financial and personal needs.
Cost-of-living increase (COLA) and maximum benefits
The Government confirmed that in 2025 the cost-of-living adjustment (COLA) will be 2.5%, applicable from 2024 for almost 7.5 million Supplemental Security Income (SSI) beneficiaries. The objective of this increase is to preserve the purchasing power of people who depend on Social Security to cover their essential expenses.
In addition, the SSA indicated that there will be an increase in the maximum retirement benefits according to retirement age:
- At age 62: the maximum increases from USD 2,710 (2024) to USD 2,831.
- At full retirement age (66 or 67, depending on the year of birth): the maximum increases from USD 3,822 to USD 4,018.
- At age 70: the highest amount is reached, rising from USD 4,873 to USD 5,018.
As for SSI, benefits for people with limited income will also be increased:
- The maximum individual monthly payment increases from USD 943 (2024) to USD 967.
- For couples, the maximum increases from $1,415 to $1,450.
New income limits and impact on funding
Another significant change is the increase in the maximum taxable income to fund Social Security. The SSA detailed that, in 2025, this limit will rise from USD 168,600 (2024) to USD 176,100. The purpose of this annual adjustment is to safeguard the financial stability of the program, allowing those with higher salaries to make higher contributions.
In addition, the entity communicated that the income limit for workers below full retirement age will rise to USD 23,400, while for those who reach full retirement age during 2025, it will be USD 62,160.
The Social Security Fairness Act: the end of WEP and GPO cuts
As of the Social Security Fairness Act (HR 82), enacted on January 5, 2025, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), two mechanisms that historically reduced the benefits of those receiving public pensions from jobs not covered by Social Security, will be eliminated. Although confirmation from the SSA on the implementation process is still pending, this change is expected to benefit thousands of public workers and retirees who previously saw their benefits reduced.
For those who have already filed an application and have received a partial or full offset of their benefits, no additional paperwork is required, beyond verifying that the SSA has updated mailing address and deposit information. In the meantime, those interested in filing for the first time and who have public pensions can do so on the official website or make an appointment at the agency.
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