The Social Security Administration (SSA) has announced a 2.5% COLA for Social Security and Supplemental Security Income (SSI) benefits in 2025. This rise will benefit more than 72.5 million Americans, allowing them to better manage their spending as inflation remains stable.
Changes to Social Security for 2025
- Social Security Benefits: Beginning in January 2025, nearly 68 million beneficiaries will have the COLA reflected in their payouts, resulting in an average monthly increase of around $50 for retirees.
- SSI Payments: The adjustment for about 7.5 million SSI users will go into effect on December 31, 2024.
- Combined Benefits: Some persons who are eligible for both Social Security and SSI will experience a rise in both benefits.
“This increase reflects our commitment to helping millions of Americans maintain their standard of living,” stated Social Security Commissioner Martin O’Malley. “Even as inflation cools, this adjustment ensures beneficiaries can keep up with rising costs.”
Comparing COLA throughout time
The 2025 COLA (2.5%) is consistent with the 10-year average of 2.6%. This is slightly less than the 3.2% adjustment for 2024, indicating a slower inflation increase.
Additional adjustments for 2025
Several further updates related to average salary increases will take effect in January 2025:
- Taxable Maximum Earnings: The maximum income subject to Social Security tax will increase from $168,600 to $176,100.
- Earnings Limit for Early Retirement: Workers under the full retirement age will have their earnings limit increased to $23,400, with $1 removed from benefits for every $2 earned above this level.
- Earnings ceiling for Full Retirement Age: For people reaching full retirement age in 2025, the ceiling will be raised to $62,160, with $1 withheld for every $3 earned above the limit until the month they reach full retirement age.
There are no earnings limits for persons who have achieved full retirement age.
How to Get Your Updated Benefit Information
In early December, the Social Security Administration will begin mailing notifications to beneficiaries about their adjusted benefit amounts. For the first time, recipients will get a revised, one-page COLA notice with individualized details, including:
- Exact benefit amounts.
- Dates for updated payments.
- Clear information regarding any deductions.
Beneficiaries with a Social Security account can get their COLA notices online rather than by mail. These secure, tailored messages will be available beginning in late November. Set up SMS or email alerts to tell consumers when their COLA notice is ready. To use this function, individuals must first create a My Social Security account at www.ssa.gov/myaccount before November 20, 2024.
Medicare and Additional Resources
Changes to Medicare in 2025 will be disclosed at www.medicare.gov. Starting in late November, Medicare beneficiaries will be able to get updated Social Security payment amounts through the My Social Security Message Center.
How is COLA calculated?
The yearly COLA is calculated by the rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as measured by the Department of Labor’s Bureau of Labor Statistics. This guarantees that the modifications are based on actual changes in living costs.
For more information on COLA and other benefit modifications, go to the Social Security website.
