When you receive benefits from the Social Security Administration (SSA), you may hear about the cost-of-living adjustment (COLA).
This annual raise helps benefits keep up with inflation. For 2025, SSA announced a 2.5 % increase.
This article explains how the increase was determined, when it takes effect, how much it means for the average recipient, and what factors to watch going forward.
What is the 2025 COLA for Social Security and SSI?
The SSA announced that Social Security benefits and Supplemental Security Income (SSI) payments will increase by 2.5 % in 2025.
This raise affects more than 72.5 million Americans who receive these federal benefits.
When does the 2.5 % COLA take effect?
The increase takes effect with benefits payable in January 2025 for those receiving Social Security retirement, disability, or survivors benefits.
For SSI recipients, the payment increase is effective with the benefit for December 31, 2024.
How was the 2.5 % increase calculated?
The COLA is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The SSA compares the average CPI-W for the third quarter of the previous year (July-September 2023) with the same period in the current year (July-September 2024).
When the difference is positive, the COLA equals that percentage.
For 2025, the CPI-W average rose about 2.5 % which triggered the 2.5 % adjustment.
How much will my benefit increase with the 2.5 % COLA?
For the average Social Security retirement beneficiary, the 2.5 % raise translates into about $50 more per month.
For example, one source estimates the average monthly benefit increases from about $1,927 in 2024 to around $1,976 in 2025.
If you receive other benefit types (such as disability), your increase will be proportionate to your base benefit.
What else changes in 2025 in connection with SSA benefits?
Besides the COLA, SSA sets other indexed amounts annually based on wage and inflation changes. For 2025:
- The maximum earnings subject to Social Security tax increased to $176,100 (up from $168,600 in 2024).
- The number of work credits and thresholds for eligibility may also increase modestly.
Why did the COLA increase only 2.5 %?
Yes, the 2.5 % is slightly below the recent decade’s average (~2.6%), and considerably lower than some recent years when inflation was higher.
Because inflation had started to cool during the measurement period (third quarter 2024), the resulting raise is moderate.
What should beneficiaries keep in mind about the 2025 COLA?
- Remember, the increase applies starting January 2025 (December 2024 for SSI).
- Look for your new benefit notice in early December 2024 or check your my Social Security account.
- The raise helps offset rising costs but may not fully match every individual’s inflation experience (for example, medical costs may rise faster).
- Since the taxable maximum earnings and other limits change, your planning should reflect updated figures.
- Because the COLA process depends on data released by the Bureau of Labor Statistics (BLS), the timing of announcements may occasionally shift.
