Social Security Benefits Might Be Harder To Qualify for in the Future: Here’s What You Need To Know
For those nearing retirement age or already receiving Social Security benefits, it’s important to stay up to date on any changes to how those benefits are paid out.
For many Americans, Social Security is an essential part of their income, so any changes to the program can affect their quality of life.
Learn More: 2 Changes Are Coming to Social Security in 2025
Consider This: 5 Low-Risk Ways To Build Your Retirement Savings in 2025
New changes are coming in 2025, and they’re slated to affect both the payments beneficiaries receive and the qualifications they’ll need to access those benefits.
Keep reading for a look at how Social Security is changing and what you need to know to be prepared.
Trending Now:
One of the biggest changes coming in 2025 is an adjustment to the earnings threshold you need to reach to earn Social Security credits.
The system currently requires American workers to earn $1,730 for each work credit, but this will rise to $1,810 in 2025.
While workers can accrue up to four credits each year, this incremental change reflects adjustments related to inflation and average wage growth.
Find Out: Social Security Announced a COLA Increase for 2025 — 5 Things Retirees Should Be Aware Of
If you’re a full-time worker, you don’t need to be concerned about these changes. If you’re working 40 hours per week over a standard 50-week work year, even at minimum wage, you’re sure to earn the maximum four credits.
However, it might be a different story if you’re a part-time worker who might struggle to accumulate enough credits.
You’ll want to carefully review these changes and predict the amount you’re likely to earn in 2025 to determine whether the changes might affect you.
Remember, while the work credits are used to determine your eligibility for benefits, they don’t affect the actual amount you receive.
Social Security credits establish only your eligibility for retirement, disability and survivors’ benefits and whether you qualify for Medicare, but they have no role in calculating the amount of your payments.
How earned credits are calculated isn’t the only change coming in 2025. The Social Security cost-of-living adjustment will be slightly different, too.
Those who receive Social Security benefits will see only a 2.5% increase in the amount paid out each month, which is a smaller bump than in previous years.
The COLA increase was 8.7% in 2023 due to inflation being at a 40-year high. The next year, it was a smaller 3.2%, and 2025’s 2.5% adjustment continues that decreasing trend.
This is because each year’s COLA increase is set by a formula used by the Social Security Administration. This formula is directly tied to the rate of inflation, and because inflation is more stable now than in previous years, this smaller increase is set to keep pace with the cost of living.
If you’re nearing retirement age, understanding the ins and outs of Social Security benefits is important.
You want to make sure your earnings are enough to secure at least four credits each year for the 10 years prior to the date of your retirement.
This is especially true if your income varies from month to month or if you’re working only part-time. If you don’t earn the minimum credits before you plan to retire, you may not be eligible for future benefits.
You’ll also want to carefully consider your timing for claiming your Social Security benefits. Though you can access your benefits as early as age 62, waiting until the full retirement age, or even longer, can mean higher monthly payments.
Even if you’re someone who won’t have to worry about qualifying for Social Security, you may want to carefully consider your post-retirement income.
It’s best to depend on Social Security as only one part of your overall retirement plan. Additional savings, investments and revenue streams from reliable sources can provide a much greater financial safety net.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Social Security Benefits Might Be Harder To Qualify for in the Future: Here’s What You Need To Know