In 2025, the Social Security Administration will increase beneficiary’s benefits by 2.5 percent, as per their announcement. For over 68 million Social Security recipients and around 7.5 million Supplemental Security Income recipients, the cost-of-living adjustment (COLA) will be applicable. The increase will be of around $50 increase in the average monthly Social Security Payment.
After significant increases in 2023 and 2022, the COLA for 2025 is the second consecutive year of more typical yearly adjustments. The increase for 2025 comes after this year’s 3.2 percent increase, which preceded the highest increase since 1981 of 8.7 percent for 2023.
SSA declared that it was raising the taxable minimum wage the amount of wages due to Social Security taxes in addition to the benefit increase. Social Security taxes wages up to $176,100 in 2025 (formerly $168,600). Although the tax rate on those wages 6.2 percent will not rise, the change will take effect in January 2025.
Social Security 2.5% COLA Increase 2025
On Thursday Social Security Administration declared Social Security 2.5% COLA Increase 2025. It follows an increase of 8.7% in 2024 and is, as anticipated, the lowest growth since 2020. The typical retiree’s check will increase from $1,927 to $1,976 per month as a result of the 2.5% increase, according to the SSA. Married couples will receive a $75 rise on average, increasing their monthly benefit from $3,014 to $3,089.
Despite being less than the 3.2% COLA in 2024, the 2.5% COLA is still rather close to the historical average. In last 20 years, the COLA has averaged around 2.6% and dropped to 0% in 2010 and 2011 following the housing crisis, and it reached a peak of 8.7% in 2023 following a jump in inflation brought on by COVID-19 pandemic.
How current adjustments relate to the COLA for 2025
The average Social Security payout as of August 2024 was $1,783.55 per month. With a payment for $1,920.48, the typical retired worker fared slightly better. In 2025, what might the typical beneficiary obtain? The CPI-W, and CW, serves as the basis for the COLA. The average retirement worker would receive $1,968.49 with the increases for 2025, bringing the average pension overall to $1,828.14. The following table displays the increases over the last ten years according to the year they went into effect.
| Year | COLA increase | Year | COLA increase |
| 2025 | 2.5% | 2020 | 1.6% |
| 2024 | 3.2% | 2019 | 2.8% |
| 2023 | 8.7% | 2018 | 2.0% |
| 2022 | 5.9% | 2017 | 0.3% |
| 2021 | 1.3% | 2016 | 0% |
Social Security 2.5% COLA January 2025 Payment Schedule
Since January 1st, 2025, is a holiday, the Supplemental Security Income payment for that month will be deferred until December 31, 2024. Despite the fact that it falls in 2024, the 2025 COLA will be included in this early payment. The standard $943 maximum payment will not apply on this particular day. As such, you should increase the amount that you receive from Social Security in addition to your usual SSI check.
- Payment Date: December 31, 2024
- Includes: January 2025 COLA
- Increase: Approximately 2.5%
What the US COLA increase have been over the previous five years
- 2.8% in 2019, A slight increase in benefits was given to beneficiaries as a result of this adjustment, which was made to account for moderate inflation.
- 2020: 1.5 percent a smaller gain than in the prior year, consistent with the period’s lower rates of inflation.
- 2021: 1.3 percent, This COLA increase was among the lowest, indicating that the cost of living was not significantly affected by inflation.
- 2022: 5.4 percent, This increase, a notable departure from prior years, was a reaction to growing rates of inflation that drove up the price of goods and services.
- 2023: 8.7 percent, The largest increase in many years, this significant change was made to assist beneficiaries in adjusting to the strong rise in inflation and rising cost of living.
Who will get least money from the COLA 2025?
Three American groups will primarily receive less money than the rest of the grantees, because of their low benefit, all of these Americans will receive less money.
- Less money will be given to SSI beneficiaries than to many retirees who receive Social Security.
- Retirement benefits beneficiaries from Social Security receiving a small check
- SSDI users receiving a small check from Social Security
If they are eligible for the full amount in 2024, SSI recipients may get up to $943. It will only be an additional twenty-three dollars a month, at $966.5, following a 2.5% COLA increase. The problem is that a lot of SSI beneficiaries do not meet the maximum benefit requirements as they also receive SSDI or retirement benefits.
As an illustration, the average SSI payout is $698. They would therefore receive an average payment of USD 715. That’s actually just an extra fifteen dollars a month on your check. Even less is paid to SSI recipients who are 65 years of age or older; their average payment is USD 574. The only monthly increase they will receive is $14.
Bottom line
Even if the increase for next year wasn’t as large as the one for this year, it’s still higher than what Social Security recipients have received for the majority of the previous ten years. It is noteworthy to mention that the program does not declare a reduction in payments; instead, it does not raise payments for a specific year, like it did in 2016.
The Social Security COLA for this year gave seniors and other beneficiaries a somewhat higher-than-normal boost in their payouts; however, the drawback is that everyone had to put up with high inflation in order to receive it. Your age is a major role in the overall amount you will receive from Social Security, so if you are thinking of filing, you should carefully evaluate when to collect benefits.
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Juniper Leena is a lawyer and finance graduate. She loves to write articles about the USA economy and social security. In her free time, she enjoys playing chess. She is the head of the writing team at Fort Hunt Herald and reports to Niamh Prescott. She also completed her MBA in finance in 2018.