Nearly all retired Americans now, or will one day, receive Social Security benefits, and those monthly payments are often used to supplement their retirement income.
Although Social Security has been threatened with insolvency for decades, declining birth rates combined with the fact that people are living longer have created a financial squeeze for the federal program.
The incoming Trump administration has also considered cutting federal funding for the Social Security Administration, which would make the program insolvent by 2031.
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For the 68 million Americans who receive a monthly Social Security check, there are a few key changes to watch out for this year. The average payment will increase, but the application process for prospective recipients is being streamlined — a welcomed relief for older Americans navigating bureaucratic red tape.
However, the Social Security Administration commissioner stepped down in November and it is currently managed by an interim commissioner. Donald Trump has already nominated a new department head, though they are subject to a Senate confirmation hearing.
New leadership directing Social Security operations could shape the organization’s trajectory for several years, which will become particularly important if insolvency becomes more likely.
A retired couple is seen discussing finances in their kitchen. Social Security payments play a major role in helping retirees supplement their income from 401(k)s, IRAs, and pensions.
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Americans will see changes in Social Security benefits
The amount the average retiree receives in Social Security benefits will increase modestly this year.
As of January 2025, the average monthly Social Security payment is $1,976. Americans below the full retirement age will only receive a maximum of $23,400 per year, while those at the full retirement age can receive a maximum of $62,160.
Retirees will see a 2.5% Cost of Living Adjustment (COLA) increase in their 2025 payments. While this is substantially lower than adjustments from the past few years, it is in line with the average COLA over the last decade.
More on Social Security:
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However, Social Security payments aren’t the only change Americans can expect in the program this year.
The Social Security Administration recently announced that those eligible for benefits can now apply online. The new digital application has only 12 questions — compared with 54 questions in the physical application.
While this is a welcomed step in streamlining and digitizing an outdated process, there are a few caveats. Applicants interested in signing up for Social Security benefits online must be below 65 and have never applied for benefits for themselves or a child.
Still, this application update will significantly improve the distribution process and make it easier for Americans to receive the Social Security benefits they are entitled to.
A new program commissioner is on the horizon
The president oversees the Social Security Administration, with the power to appoint and fire leading officials.
Martin O’Malley, commissioner of the SSA, was appointed by Joe Biden after terminating Trump appointee Andrew Saul in August 2021. O’Malley stepped down in November 2024 to start a campaign to lead the Democratic National Convention, potentially anticipating a dismissal from the role under the Trump administration.
O’Malley is credited with helping digitize the program’s application and mailing process and improving customer service by reducing hotline wait times.
Related: Dave Ramsey warns Americans on Social Security and 401(k)s
Trump has nominated Frank Bisignano, Fiserv Chairman, to take over the Social Security Administration. However, for the appointment to become official, Bisignano will need to pass Senate confirmation hearings.
The Trump campaign vowed to trim the fat on federal spending for bloated government programs, and a new commissioner acting under this directive could impact the program’s viability.
The president-elect’s proposed policies to eliminate taxes on Social Security benefits, implement tariffs, and end taxation on tips and overtime would widen the program’s deficits and could mean that insolvency could become a reality by 2031.
How the incoming administration approaches federal funding and tax cuts could impact Social Security for years to come.
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