Social Security maximum benefit increasing for 2025 - more than just COLA?

Yes, this is accurate. The maximum benefit at Full Retirement Age (FRA) does increase each year, and it's separate from the annual COLA adjustment. The maximum benefit increases because the wage base limit (the maximum amount of earnings subject to Social Security tax) increases each year. For 2024, the maximum monthly benefit for someone retiring at FRA was about $3,822, and it will be higher for 2025. The COLA only affects people who are already receiving benefits. If you're filing for the first time in 2025, the maximum benefit calculation will be based on the updated wage base limit, which typically results in a higher potential maximum than the previous year's maximum plus COLA. Keep in mind that very few people actually qualify for the maximum benefit - you would need to have earned at least the maximum taxable amount for 35 years of your working life.

The maximum benefit increase is specifically for people who've consistently earned at the taxable maximum for 35+ years. For everyone else, your benefit is calculated based on your actual earnings history, adjusted for inflation, and then the COLA is applied. What might be causing confusion is that the Primary Insurance Amount (PIA) formula itself can change slightly each year. This formula is used to calculate your benefit amount based on your lifetime earnings. So technically, the same earnings history might produce a slightly different initial benefit depending on which year you claim. But for most regular earners, the COLA is going to be the main factor affecting your benefit amount year to year. The 2.5% is definitely lower than last year's COLA, which is why some people feel disappointed.

Wait I'm confused about something. I thought the yearly COLA and the maximum benefit were two different things entirely? My dad started receiving SS last year and he said his check is going up by 2.5% next year. But if I file next year at age 67 (my FRA), am I getting a completely different calculation? Does that mean I'm better off waiting until 2025 to file instead of filing in late 2024?

Nobody has mentioned the bend points yet, which also adjust annually. The PIA formula uses these bend points to calculate benefits. For 2024, the formula takes 90% of your first $1,174 of AIME, plus 32% of AIME between $1,174 and $7,078, plus 15% of AIME over $7,078. These bend points will be slightly higher for 2025, which can make a small difference in benefit calculations. This is separate from both the COLA and the maximum taxable earnings increase. It's one more reason why the maximum potential benefit for someone filing at FRA changes from year to year beyond just the COLA adjustment. But as others have said, these formula adjustments generally have minimal impact compared to your earnings history and claiming age.

My sister in law works at Social Security and she told me that most people dont get anywhere close to the maximum anyway. She said you need to make at least the maximum taxable income (around $168,000 for 2023) for 35 years straight to get the max. Most people dont come close to that. But my brother did get extra when he retired this year compared to what the calculator showed him last year so maybe theres something to it.

For what it's worth, I spent 3 hours trying to get through to someone at SSA last month to ask a similar question. After being on hold forever and getting disconnected twice, I finally gave up. Then someone recommended Claimyr.com to me - it's a service that waits on hold with Social Security and calls you when an agent is on the line. I was skeptical but it actually worked - you can see how it works in their video demo here: https://youtu.be/Z-BRbJw3puU The agent I spoke with confirmed that while the maximum benefit does increase each year, for the vast majority of us who aren't at the maximum earnings level, the year-to-year formula changes have minimal impact compared to our own earnings history and claiming age. She said filing in December vs. January would likely make very little difference.

@username505 No, it was pretty straightforward. They just need your phone number so they can call you when an agent is ready. They don't need your SSN or any of your personal Social Security information.

To directly answer your original question - yes, the maximum benefit for someone filing at FRA is increasing for 2025, and yes, this is separate from the COLA adjustment. The COLA applies to people already receiving benefits, while the maximum benefit calculation applies to new filers. However, this doesn't mean you'll get more than a 2.5% increase overall. Your benefit is calculated based on your own earnings history, not on what the maximum potential benefit is. The only way this affects you personally is through small adjustments to the PIA calculation formula that happens each year. For most people, these formula adjustments result in very small differences - we're talking about maybe $5-15 per month different than if you had filed with the exact same earnings history the previous year. Your claiming age and earnings history are FAR more important factors in determining your benefit amount.