Social Security announces 2025 COLA increase

The Social Security Administration (SSA) announced on Thursday that more than 72.5 million Americans will see a 2.5% increase in their benefit payments in 2025. This cost-of-living adjustment (COLA) represents the lowest annual increase since 2021 when beneficiaries experienced a 1.3% rise in benefits. The 2025 COLA is notably lower compared to recent years, driven by record-high inflation.   Beneficiaries saw a 3.2% increase in 2024, an 8.7% increase in 2023, and a 5.9% boost in 2022. As the pace of inflation has moderated, COLA adjustments are returning to more typical levels. According to the Senior Citizens League, a nonpartisan senior advocacy group, Social Security’s annual benefit increases have averaged about 2.6% over the past 20 years. The exact percentage increase for the 2025 COLA will be determined from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data for July, August, and September of 2024. The SSA will formally announce the 2025 COLA on October 10, 2024. In December 2024, the SSA will send out individualized notices describing each beneficiary’s updated benefit amounts for 2025.

2025 COLA increases announced

Beneficiaries can access this information through their online Message Center if they have a Social Security account. Notices by mail will be distributed during December. Although the COLA officially applies to payments made in December 2024, beneficiaries’ checks will begin to reflect the adjustment in January 2025. The payment date depends on the beneficiary’s birthdate. While the expected 2.5% increase could alleviate some financial pressure, it might not keep up with the overall increase in costs. Beneficiaries should refer to their personalized notice for the most accurate data about their adjusted benefit. It is important to note that if Medicare premiums increase, it could reduce the net increase in Social Security payments. SSI recipients will receive their adjusted payments on December 31, 2024.