Social Security Boost for These Americans: In 2025, the Social Security Administration (SSA) will implement the annual Cost-of-Living Adjustment (COLA), which is expected to increase by 2.5%.
Beneficiaries will be able to maintain their purchasing power despite rising living costs with this increase. Even though the increase is lower than the 3.2% COLA for 2024, millions of Americans will still see an increase in their monthly benefits.
COLA for Social Security in 2025: What Is It?
To ensure that Social Security benefits remain valuable, the SSA adjusts COLAs annually. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) measures changes in the price of common goods and services.
In 2025, COLA is expected to be 2.5%, down from 3.2% in 2024, but close to the long-term average of 2.6%.
Groups affected by this increase include:
- Social Security benefits are received by retirees.
- Social Security Disability Insurance (SSDI) beneficiaries.
- People receiving Supplemental Security Income (SSI).
- Survivors receiving benefits from a deceased relative.
Dates to remember
- The official COLA announcement will be made on October 10, 2024. In the announcement, the exact percentage increase and its impact on monthly payments will be revealed.
- A notice from the Social Security Administration detailing the exact dollar increase beneficiaries can expect in their monthly checks for 2025 will be sent to beneficiaries in December 2024.
- COLA increase will be reflected in the first payment in January 2025. Beneficiaries’ birth dates will determine payment dates.
| Birth Date | Payment Date (2025) |
|---|---|
| 1st – 10th of any month | January 8, 2025 |
| 11th – 20th of any month | January 15, 2025 |
| 21st – 31st of any month | January 22, 2025 |
COLA impact for 2025
Social Security Boost for These Americans: A 2.5% COLA for 2025 is lower than previous years, but it reflects a positive trend in the economy, where inflation is stabilizing after higher increases during the pandemic.
An individual receiving $2,000 per month will see their benefits increase to approximately $2,050-an increase of $50. Though not a significant increase, this increase will still help offset some rising healthcare and housing costs.
According to The Senior Citizens League (TSCL), despite COLA increases since 2010, Social Security benefits have lost around 20% of their purchasing power.
Generally, this is due to the CPI-W, which is used to calculate COLA, not fully reflecting the spending patterns of seniors.
COLAs Aren’t Always Beneficial
Social Security Boost for These Americans: Beneficiaries may be concerned about the lower COLA for 2025. Although a high COLA may indicate higher inflation, it’s important to understand that it’s often a result of a higher inflation rate. Because of global events such as the COVID-19 pandemic and the Ukraine war, COLA in 2022 reached 8.7%, one of the highest in decades. High COLAs may mean more money in the short term, but they also indicate economic hardship and rising living costs.
Low COLAs indicate that inflation is easing, which indicates that the economy is stabilizing. Some beneficiaries may be disappointed with the increase for 2025, but it signals the broader economic conditions are improving, thus resulting in more manageable price increases.
Benefits Estimation for 2025
Despite the uncertainty surrounding the exact COLA, beneficiaries can estimate their new monthly payments by adding 2.5% to their current benefits. As an example:
| Current Monthly Benefit | Estimated Monthly Benefit (with 2.5% COLA) |
|---|---|
| $1,500 | $1,537 |
| $2,000 | $2,050 |
| $2,500 | $2,562 |
Final thoughts
Social Security Boost for These Americans: Millions of Social Security beneficiaries will benefit from the 2025 COLA increase, which will keep up with inflation.
Despite the lower than expected increase, it indicates stabilizing economic conditions.
The COLA will be officially confirmed on October 10, 2024, and beneficiaries can expect their first increase in January 2025.
