For 2025, Social Security benefits will see a 2.5% cost-of-living adjustment (COLA), the smallest annual increase since 2021. This change, announced by the Social Security Administration, will affect nearly 68 million Social Security beneficiaries and 7.5 million people receiving Supplemental Security Income (SSI).
The 2.5% increase translates to an average monthly benefit boost of about $50 for retirees. Currently, the average monthly benefit for retirees is $1,927, which will rise to $1,976 per month. For married couples who both receive Social Security, their average benefit will increase from $3,014 to $3,089 per month.
The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks price changes for a specific basket of goods. However, some advocates argue that this index does not accurately reflect the higher costs faced by retirees, particularly for healthcare. They suggest using the Consumer Price Index for Elderly Consumers (CPI-E) instead.
Despite the increase, many seniors feel it is insufficient to keep up with their expenses. Inflation, although easing, has still eroded the purchasing power of Social Security benefits over the years. For example, Sherri Myers, an 82-year-old resident, expressed that the increase won’t be enough to cover her day-to-day expenses and is looking for additional work to supplement her income.
The new benefit amounts will be distributed starting in January 2025 for Social Security recipients and on December 31, 2024, for SSI beneficiaries. The Social Security Administration will also begin mailing newly designed COLA notices in December, which will provide clearer and more personalized information about the benefit increases.
This year’s COLA is part of a trend where increases have been stabilizing as inflation rates cool down. In the past few years, COLA increases were higher due to high inflation rates, with a 3.2% increase in 2024 and an 8.7% increase in 2023.
