What All Retirees Need to Know About Social Security in 2025

Key Points

• The Social Security full retirement age increased by two months for people born in 1959.

• Social Security can now withhold 50% of your monthly benefits due to an overpayment.

• On the positive side, you can now earn more while claiming Social Security benefits early.

• The $23,760 Social Security bonus most retirees completely overlook ›

Social Security has proven to be one of America's most valuable social programs, keeping millions of retirees financially afloat. As of August, there were 53 million people receiving retirement benefits, with many of them relying on Social Security for a bulk, if not all, of their retirement income.

Despite all the great things about Social Security, one thing that tends to annoy many people is the constant changes. Some changes, like the cost-of-living adjustment (COLA), are expected each year, while others are one-off. If you're currently receiving Social Security or will start this year, here are three changes to be aware of now.

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The full retirement age increased by two months

Your full retirement age (FRA) is one of the most important numbers in Social Security. It's when you're eligible to receive your base monthly Social Security benefit, known as the primary insurance amount (PIA).

Beginning this year, the FRA is 66 years and 10 months for people born in 1959, two months later than the FRA of people born in 1958. For many people, knowing their FRA is important, because benefits are permanently affected based on whether you claim before or after that time.

If you claim benefits before your FRA, the monthly amount will decrease by 5/9 of 1% for each month early, up to 36 months. After 36 months, benefits are further reduced by 5/12 of 1% monthly. For example, if your FRA is 66 and 10 months and you claim benefits at 64 (the earliest age that you can claim), your monthly benefit will be reduced by roughly 18.9%.

If you delay benefits past your FRA, the monthly amount will increase by 2/3 of 1% each month (8% annually) until you turn 70.

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The overpayment recovery rate has increased

Under a rule change from former President Joe Biden, if Social Security overpaid you in benefits, it could only recover 10% of your monthly checks until the overpayment was recovered. For example, if your monthly benefit is typically $2,500, and you accidentally receive $3,500 for one month, Social Security would withhold $250 from your payments for four months until it received the $1,000 back.

Now, because of a change implemented by the Trump administration, Social Security can garnish up to 50% of your monthly benefits until it receives the overpayment amount. In this case, if you receive $3,500 instead of $2,500, Social Security would withhold the full $1,000, since it's less than half of your monthly benefit.

The good news is that you can appeal the decision or request a waiver, as long as you can prove the overpayment was the Social Security Administration's fault and paying it back would put your livelihood at risk. To appeal an overpayment, fill out this Request for Waiver of Overpayment Recovery form, and send it to the Social Security branch nearest your home within 30 days of receiving your notice.

The earnings limit for facing the retirement earnings test increased

If you claim benefits at or after your FRA, you can earn as much as you want with no repercussions. However, if you claim benefits before your FRA, earning over a certain amount will subject you to Social Security's retirement earnings test (RET).

If you won't reach your FRA this year, the earnings limit is $23,400 -- a $1,080 increase from 2024. Earning more than that will reduce your annual benefits by $1 for every $2 over.

If you will reach your FRA this year, the earnings limit is $62,160 -- a $2,640 increase from 2024. Earning more than that will reduce benefits by $1 for every $3 over.

Luckily, the reduced benefits aren't permanently lost. When you finally reach your FRA, Social Security recalculates your benefits in a way that gradually adds back the withheld amount over your lifetime.

The $23,760 Social Security bonus most retirees completely overlook

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