The Social Security earnings-test limit will be raised for most paying jobs in the fiscal year 2025. The potential affected group includes retirees and recipients of social security benefits who work additionally. These have been confirmed to place more space among beneficiaries so they can continue working beyond the average retirement age without penalties or reduction in benefits.
What Are Social Security Earnings-Test Limits?
The Social Security earnings test determines how much a person can earn before the benefits are temporarily reduced. Benefits are reduced proportionately when people who have not yet attained the FRA exceed the limit. But in the case of retirees who have reached their FRA, no deductions are applied and the amounts withheld are returned in higher monthly benefits.
Changes in 2025
Apparently, the earning-test limits are going to be raised substantially in 2025, following recent pronouncements. In 2025, for one to be below full retirement age, they will no longer have a limit on their earnings from $19,560 to $21,240. This means one is allowed more earnings before being subjected to Social Security benefits deductions. Again, the reduction rate continues at $1 for every $2 earned above the limit.
For someone who reached his or her FRA in 2025, it would mean the limit increases to $56,520 from the current $51,960. Moreover, for every $3 above that amount, $1 will be taken out of their benefits. Once they reach the FRA, they will not experience a continued decline of their benefits even if they continue making more.
Effect to recipients
This modification is a welcome development for beneficiaries under Social Security who would eventually work while still receiving their benefits. This means they can increase their income without the worry of major cuts to their monthly benefits particularly as inflation and living costs skyrocket. Such changes further mark another step in a positive direction towards greater financial security for retirees.
