The SSA recently announced that the Cost of Living Adjustment (COLA) for 2025 is 2.5 percent, affecting millions of Americans on Social Security and SSI. It’s supposed to allow recipients to keep pace with inflation as their costs keep increasing. Here is a look at how the COLA increases your benefits, starting in January.
Understanding the COLA increase
The COLA is the annual adjustment of benefits against the erosion of purchasing power due to inflation. The COLA increase follows the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W, reflecting the average change in prices of a basket of goods and services. For the year 2025, the SSA has set the COLA at 2.5%, bringing in an average increase of about $50 per month among Social Security beneficiaries and was stated in this article, SSA announces 2025 COLA increase: How much is it, when does the Social Security rise take effect?
- Total beneficiaries affected: About 68 million Social Security beneficiaries will begin to see this increase as early as January 2025.
- Supplemental Security Income (SSI): Increased payments to about 7.5 million SSI beneficiaries will begin on December 31, 2024.
What it means for your benefits each month
The average monthly benefit payment for retirees is currently about $1,927. With the new COLA, this amount will rise to about $1,976 beginning in January. For married couples who both receive benefits, their average monthly payout will grow from $3,014 to about $3,089.
- Individual retirees: $1,927 to $1,976
- Married couples: $3,014 to $3,089
The following individual amounts are subject to individual circumstances but represent a similar percentage increase for SSI recipients.
Brief history of COLA adjustments
2.5% is considerably smaller compared to adjustments in past years:
- 2024: 3.2%
- 2023: 8.7% – highest adjustment in nearly 40 years
- 2022: 5.9%
While this year’s adjustment seems modest in comparison, especially against the recent years, it replicates a decade-long average of about 2.6%. This year’s smaller increase reflects a cooling inflation rate compared to peaks experienced during the pandemic.
Why this matters
But even modest raises can make a huge difference in the financial stability of beneficiaries, many of whom are seniors living on fixed incomes. Yet advocates maintain the current formula behind the COLA calculation fails to capture the true increase most older Americans face day in and day out.
But Nancy Altman, president of Social Security Works, said such automatic annual increases, while essential to maintaining purchasing power, often do not capture what seniors actually pay as was discussed with this article, How much will Social Security increase in 2025? Here is the experts’ negative prediction on the COLA increase on October 10. Many are pushing to adopt another measure, the Consumer Price Index for Elderly Consumers, or CPI-E, which they say would better capture inflation felt by older people.
News alerts and disability updates
Beneficiaries should expect to be mailed notices about their new benefit amounts, starting early December of 2024. Individuals who have created a personal account on the SSA website will have the option to view their COLA notice online through the Message Center of their account. This option gives them a faster and more secure way to view changes in their benefits.
Read more: Not just the COLA – Here’s the list of changes Social Security will make in October 2025 – Check to make sure you don’t…
Read more: Goodbye to Social Security payments – After the COLA, here are the big changes that could affect your paychecks next year
