In 2025, Social Security benefits and Supplemental Security Income (SSI) payments for over 72.5 million Americans will increase by 2.5%, as announced by the Social Security Administration. This adjustment aims to help beneficiaries keep pace with living expenses, especially as inflation begins to cool.
Cost-of-Living Adjustment (COLA)
The 2.5% COLA will result in an average increase of about $50 per month for Social Security retirement beneficiaries, effective January 2025. This adjustment is slightly below the decade’s average COLA of 2.6% and follows a 3.2% increase in 2024.
Approximately 68 million Social Security beneficiaries will experience this increase starting in January, while nearly 7.5 million SSI recipients will see increased payments beginning December 31, 2024.
Adjustments to Taxable Earnings
In line with rising average wages, the maximum amount of earnings subject to Social Security tax will increase from $168,600 to $176,100 in January 2025.
This adjustment ensures that higher earners contribute appropriately to the Social Security system, maintaining its financial health.
Notification Process for Beneficiaries
The Social Security Administration began mailing notifications about the new benefit amounts in early December.
For the first time, beneficiaries received a redesigned, one-page COLA notice featuring plain language and personalized information, including exact dates and dollar amounts.
Those with a personal my Social Security account could view their COLA notice online, offering a secure and faster alternative to traditional mail.
Medicare Considerations
Beneficiaries enrolled in Medicare can find information about 2025 changes at www.medicare.gov.
For Social Security beneficiaries with Medicare, the 2025 benefit amounts were available via the my Social Security Message Center starting in late November. Those who did not opt for online messages received their COLA notice by mail in December.
| Year | COLA Percentage | Average Monthly Increase | Taxable Maximum Earnings | SSI Payment Start Date |
|---|---|---|---|---|
| 2023 | 8.7% | Varies | $160,200 | December 31, 2022 |
| 2024 | 3.2% | Varies | $168,600 | December 31, 2023 |
| 2025 | 2.5% | ~$50 | $176,100 | December 31, 2024 |
The Social Security Act mandates that COLA calculations are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as determined by the Department of Labor’s Bureau of Labor Statistics.
This linkage ensures that benefit adjustments accurately reflect changes in the cost of living, providing essential financial support to millions of Americans.
FAQs
What is the COLA for 2025?
The Cost-of-Living Adjustment for 2025 is 2.5%, resulting in an average increase of about $50 per month for Social Security retirement beneficiaries.
When will the increased payments begin?
Social Security beneficiaries will see the increase in their January 2025 payments, while SSI recipients will receive increased payments starting December 31, 2024.
How is the COLA determined?
The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), measuring changes in the cost of living.
Will there be changes to the taxable maximum earnings?
Yes, the maximum amount of earnings subject to Social Security tax will increase to $176,100 from $168,600 in January 2025.
How can I view my new benefit amount?
Beneficiaries can view their new benefit amounts online through their personal my Social Security account or wait for the mailed notice sent in December.
