The 2025 Social Security COLA will boost benefits and Supplemental Security Income (SSI) payments by 2.5%. 72.5 million Americans will see benefits increase January 1, 2025.
Social Security Benefits and SSI Payments to Increase by 2.5% in 2025
This adjustment will see Social Security retirement benefits rise by an average of about $50 per month. Historically, the annual cost-of-living adjustment (COLA) has averaged 2.6% over the past decade, with a 3.2% increase last year.
“Social Security benefits and SSI payments will increase in 2025, helping tens of millions of people keep up with expenses even as inflation has started to cool,” said Martin O’Malley, Commissioner of Social Security.
Other key changes in the 2025 Social Security COLA include adjustments to the maximum earnings subject to Social Security tax, which will rise from $168,600 to $176,100. These changes reflect an increase in average wages and are part of annual updates to the program.
Is the 2025 increase enough for Senior Citizens?
The Social Security Administration announces its annual COLA each fall based on a metric known as the “Consumer Price Index for Urban Wage Earners and Clerical Workers,” or CPI-W. The index tracks average change in prices paid by certain workers for a given basket of goods, during the third quarter, or July through September.
Inflation has fallen sharply since hitting a 40-year peak in June 2022. However, some senior citizens groups argue that Social Security’s annual COLA is failing to keep up with older Americans’ financial needs. According to an MSN report, the CPI-W tracks spending by workers, and so doesn’t accurately track retirees’ higher costs for health care, which has eroded seniors’ purchasing power.
Starting in early December, beneficiaries will begin receiving notifications about their new benefit amounts. For the first time, the SSA is introducing a redesigned, simplified COLA notice, making it easier for recipients to find essential information. Additionally, the new notice is a single page with clear, personalized details, including exact dates and dollar amounts of new benefits.
