With the 2025 Cost-of-Living Adjustment (COLA) projected at 2.5%, Social Security benefits for retirees will see an average monthly increase of around $50.
This adjustment is aimed at helping retirees manage rising living costs, yet it brings a tradeoff for current workers, particularly those with lower wages.
In 2025, American workers will need to earn more to qualify for Social Security work credits, which are essential for securing future retirement benefits. Here’s a breakdown of what these changes mean and how Social Security credit requirements have evolved over time.
How Social Security Credits Work
To receive Social Security benefits, workers must accumulate a minimum of 40 work credits, the equivalent of roughly 10 years of work, over their career.
Each year, workers can earn a maximum of four credits, with each credit representing a quarter of coverage. These credits build up over a worker’s career and are crucial in determining eligibility for retirement, disability, and survivor benefits.
However, the earnings required to obtain a single credit increase periodically, reflecting adjustments in inflation and living costs.
2025 Earnings Requirement per Credit
The SSA has confirmed that, due to the 2025 COLA increase, workers will need to earn $1,810 to earn a single Social Security credit, up from $1,730 in 2024.
This means workers will need to make $7,240 annually to receive all four possible credits, up from $6,920 in 2024.
These increases are designed to maintain the credit’s value relative to inflation, but they pose challenges for low-wage workers, who will need to meet this higher earnings threshold to qualify for future Social Security benefits.
Social Security Credit Requirements Over Recent Years
| Year | Earnings Needed per Credit | Total Earnings Needed for 4 Credits |
|---|---|---|
| 2018 | $1,320 | $5,280 |
| 2019 | $1,360 | $5,440 |
| 2020 | $1,410 | $5,640 |
| 2021 | $1,470 | $5,880 |
| 2022 | $1,510 | $6,040 |
| 2023 | $1,640 | $6,560 |
| 2024 | $1,730 | $6,920 |
| 2025 | $1,810 | $7,240 |
This progression illustrates the steady increase in earnings required to earn credits. Workers now need significantly more income to earn Social Security credits than in past decades, which underscores the impact of inflation on Social Security’s structure.
The Impact of COLA on Social Security Credits
The SSA began tracking credit requirements in 1978, when workers needed only $250 to earn one credit. Since then, this requirement has increased steadily to keep up with rising living costs.
By 1988, the amount needed had nearly doubled to $470, and by 1998, it reached $700. In 2008, workers needed $1,050 to secure a credit, and the figure has continued to rise over the past 15 years.
Milestones in Social Security Credit Requirements
| Year | Earnings per Credit | Notable Increase |
|---|---|---|
| 1978 | $250 | Initial tracking year |
| 1988 | $470 | Nearly doubled from 1978 |
| 1998 | $700 | Continued steady rise |
| 2008 | $1,050 | Marked significant increase |
| 2018 | $1,320 | Further adjusted for inflation |
Each adjustment reflects the SSA’s commitment to maintaining the purchasing power of benefits. However, these changes also mean that current workers, especially those on low or variable incomes, may find it increasingly challenging to earn sufficient credits.
How This Affects Low-Wage Workers
For workers on lower wages, the rising credit requirement can make it harder to qualify for future benefits. While higher COLA adjustments offer immediate relief to retirees, those still working must earn more each year to secure their Social Security future.
This impact is especially significant for part-time or seasonal workers, who may need to work additional hours or seek higher-paying roles to meet the annual earnings requirement.
Why Tracking Credits Is Important
Understanding your Social Security credits is key to planning for retirement. The SSA provides an annual statement that shows how many credits you’ve earned, your estimated retirement benefit, and your eligibility status.
You can track your credits through the SSA’s online portal, “My Social Security,” to ensure you’re on track to meet eligibility requirements for retirement, disability, or survivor benefits.
In summary, the 2025 COLA increase brings a mix of benefits and challenges. While retirees will see a modest increase in their monthly checks, current workers will need to meet higher earnings thresholds to earn Social Security credits.
As Social Security credit requirements continue to rise in line with COLA, tracking your work credits and understanding your earnings trajectory will be essential for securing a comfortable retirement.
