It's been a crazy ride for the stock market in 2025, but retirees have also been adjusting to some new changes to Social Security this year. The program typically sees a few changes each year, some of which happen annually and others that are from new laws or laws phasing in.

Either way, it's a good idea for retirees to understand the changes so they can map out their budgets and understand the things that could impact their finances. Here are three Social Security changes retirees need to know about in 2025.

1. Benefits are higher

An annual part of the Social Security program is the cost-of-living adjustment (COLA), which is intended to help maintain the purchasing power of benefits so retirees can keep pace with inflation. However, critics argue that the COLA hasn't done enough over the years and retirees have actually lost purchasing power.

Because the purpose of the COLA is to keep pace with inflation, the COLA is calculated based on inflation data. Specifically, the Social Security Administration (SSA) looks at data on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of the year (the months July, August, and September). The index figures are averaged over those three months, and then that average is compared to the average for the same period in the previous year. In 2024, this number came out to 2.5%, so benefits rose 2.5% in 2025.

After several years of high inflation, this was the lowest COLA in four years. The COLA is a double-edged sword because higher COLAs mean a higher cost of living, and vice versa.

In the SSA's semi-annual fact sheet for the six months ended Dec. 31, 2024, the average monthly Social Security benefit for retired workers was $1,975, for an annual benefit amount of $23,700. With a 2.5% bump to benefits, those amounts rose to $2,024 per month and $24,293 annually in 2025.

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2. Some retirees will have to wait a few months longer to hit their full retirement age

The full retirement age (FRA) is another key Social Security concept. Retirees can begin claiming benefits as early as age 62 and as late as age 70, but the earlier one claims benefits, the less they'll receive monthly. At FRA, retirees can receive the full amount of benefits they're entitled to, based on the number of years they've worked and how much they've made throughout their careers.

For retirees born in 1960 and after, the FRA is 67. However, if you were born between 1955 and 1959, the FRA could be reached before the age of 67.

Retirees who fall into this latter group could potentially have to wait a few more months to reach their FRA this year than in years past. For instance, last year, a retiree born in 1958 could reach their FRA at the age of 66 and eight months. But the cohort born in 1959 will need to wait until they are 66 and 10 months.

3. You can earn more while collecting benefits

Some retirees begin claiming Social Security benefits while continuing to work. However, if retirees make income over a certain threshold before reaching full retirement age, they may be subject to having some of their benefits withheld. These thresholds typically increase each year based on changes to the National Average Wage Index.

In 2024, the SSA would withhold $1 in annual benefits for every $2 earned over $22,320. In the year in which someone reaches their FRA, this threshold rises significantly. In 2024, the SSA would temporarily withhold $1 for every $3 earned over $59,520. In 2025, the lower limit of the earnings test rose to $23,400 and the upper limit rose to $62,160.