The Social Security Administration (SSA) announced an increase of 2.5% in the cost-of-living adjustment (COLA) for 2025. This adjustment is meant to help beneficiaries keep up with inflation. There are over 72.5 million Americans receiving benefits from the Social Security program and Supplemental Security Income (SSI).
Effect on Monthly Benefits
Beginning in January 2025, Social Security beneficiaries will receive monthly amounts increased by about $50. For instance, the average retirement benefit would go up from $1,927 to $1,976.
Changes in Supplemental Security Income (SSI)
SSI recipients will receive a 2.5% increase in their monthly balances. Consequently, the maximum federal SSI payment for individuals will rise to $967 per month, while couples can expect up to $1,450 per month. These adjusted payments will begin on December 31, 2024.
It is true that this factors the COLA.
Annually, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year to the third quarter of the current year is what is used to determine COLAs. The 2.5% increase for 2025 was moderate, considering the 3.2% adjustment for 2024 in terms of inflation.
More Changes in 2025
In addition to this benefit increase, the maximum amount of earnings subject to Social Security tax will increase to $176,100 in 2025, a hike from $168,600. This means higher earners would be contributing more to coffers of the Social Security system.
Conclusion
An adjustment of 2.5% for the COLA in 2025 helps Social Security beneficiaries and recipients of SSI to preserve purchasing power against the backdrop of changing economic conditions. Beneficiaries will experience these adjustments in their payment amounts by the end of 2021 and full year of 2025.
