We’re just weeks away from the new Social Security cost-of-living adjustment (COLA) for 2025 coming into effect. Starting in January, millions of Social Security beneficiaries will see a 2.5% increase in their monthly payments.
Though lower than the COLA for the past two years, this adjustment aims to help beneficiaries keep up with rising costs. Below, we’ll break down everything you need to know, from what COLA is to how it will affect your benefits.
What Is the Social Security COLA?
The Social Security COLA is an annual adjustment to benefits designed to keep up with inflation. It’s calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the cost of common goods and services.
The Social Security Administration (SSA) announces the COLA each October, and it goes into effect the following January. This ensures that benefits reflect changes in living expenses caused by inflation.
How Much Will Benefits Increase in 2025?
For 2025, the SSA announced a 2.5% COLA. Here’s how it compares to previous years:
| Year | COLA (%) | Average Monthly Increase (USD) |
|---|---|---|
| 2023 | 8.7 | $146 |
| 2024 | 3.2 | $52 |
| 2025 | 2.5 | $48 |
The new COLA will increase monthly checks for 72.5 million beneficiaries, including those receiving retirement, survivors, Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI). On average, beneficiaries can expect an additional $48 per month, depending on their benefit level.
Why Is the 2025 COLA Lower?
The 2025 COLA is smaller than in recent years, reflecting slowing inflation rates. For comparison:
- 2023: A significant 8.7% COLA addressed soaring inflation.
- 2024: A more moderate 3.2% adjustment aligned with cooling inflation.
- 2025: The 2.5% increase reflects further stabilization in price growth.
This trend suggests that while prices are still rising, the pace of increases has slowed.
What Other Benefits Are Affected by COLA?
The COLA doesn’t just impact Social Security checks. Other government programs use COLA to adjust their benefits, including:
- Supplemental Security Income (SSI)
- Social Security Disability Insurance (SSDI)
- Medicare premiums and deductibles
- Supplemental Nutrition Assistance Program (SNAP)
These adjustments help ensure benefits keep pace with inflation across various programs.
How to Check Your New Benefit Amount?
The SSA will send COLA notices to all beneficiaries in December. If you’ve set up a My Social Security account online, you can find your notice in the Message Center.
To calculate your new payment:
- Take your current monthly benefit.
- Multiply it by 2.5% (or 0.025).
- Add the result to your current payment.
For example, if your current benefit is $1,600:
1,600 × 0.025 = $40
1,600 + $40 = $1,640
Your new monthly benefit would be $1,640 starting in January.
Concerns About COLA Accuracy
While COLA aims to reflect inflation, some senior advocates argue it doesn’t accurately capture the rising costs seniors face. A recent survey by the Senior Citizens League (TSCL) found that:
- 72% of older Americans believe Congress should prioritize recalculating COLA to better address seniors’ expenses.
- 67% of seniors rely on Social Security for more than half their income.
- 62% worry their benefits won’t cover essentials like groceries and medical care.
What’s Next for Seniors?
The 2025 COLA provides some relief, but many seniors continue to feel the strain of rising costs. Advocates are pushing for changes to ensure future COLAs reflect expenses like medical care and housing, which often rise faster than general inflation.
For now, beneficiaries can look forward to a small but meaningful boost in their monthly checks come January.
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