The Social Security Administration announced a 2.5% cost-of-living adjustment (COLA) for 2025.
This year's increase is more in line with past raises like last year's 3.2% but is the smallest since 2021. A vast difference from 2023's 8.7% increase, the highest in 40 years due to post-Covid inflation.
These COLA increases follow a 5.9% increase for 2022, 1.3% increase for 2021, 1.6% increase for 2020, a 2.8% increase for 2019, and a 2% increase for 2018.
The 2.5% raise applies to everyone who receives Social Security benefits, including Social Security retirement, Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI) benefits. Over 72.5 million Americans will experience a rise in benefits.
How Much Will Your Social Security Check Increase?
The average Social Security check for disabled workers was $1,542 a month in 2024. Next year's increase will raise the average monthly payment by $38 to $1,580.
For people receiving SSI, the maximum federal payment will grow with the adjustment from $943 per month in 2024 to $967 per month in 2025.
To determine your new benefit check amount, take your 2024 monthly benefit and multiply that times 1.025. This will give you an estimate of your check amount for 2025.
You should receive a notification from Social Security indicating your new benefit amount in early December.
Most recipients can also view their COLA notice online through their My Social Security account.
How is Social Security COLA calculated?
The yearly COLA amount is based on increases in the Consumer Price Index (CPI) which measures the cost of inflation for goods and services, but not health care.
Here's a quick breakdown of the process:
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CPI-W Tracking: Throughout the year, changes in the CPI-W are tracked. This index is a comprehensive measure of price changes for a basket of consumer goods and services.
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Department of Labor's Role: The Bureau of Labor Statistics under the Department of Labor is responsible for gathering and analyzing this data.
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Annual Comparison: The COLA is determined by comparing the average CPI-W for the third quarter of the current year to the same period of the prior year.
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Percentage Increase: If there is an increase in the CPI-W, Social Security benefits will rise by that percentage at the start of the next year, ensuring that benefits maintain their purchasing power.
Most people receiving Social Security are retired or disabled. For most, health care is their biggest expense, and it is one of the fastest-rising costs in America.
Premiums for Medicare Part B are automatically deducted from the checks of many Social Security recipients.
Some are proposing that Social Security begin using a price index for the elderly, called CPI-E, that would take into account items such as health care costs, which have increased at a greater rate than inflation overall.
Healthcare cost increases have outpaced COLA increases for years. Medicare Part B premiums are going up three times faster than the annual benefit increases. In addition, the CPI also does not take into account the rising cost of prescription drugs.
But so far, no action has been taken on this proposal.
Changing to the CPI-E was included in the Social Security 2100 Act aimed at fixing Social Security put forward by Rep. John Larson, D-Conn, but never passed.
As of March, inflation has caused Social Security payments to lose 40% of their buying power since 2000, according to a study released by The Senior Citizens League. Monthly benefits would have to increase by $540 to maintain the same level of buying power as in 2000.
What improvements have been made to the COLA notice?
While the cost of living adjustment calculation remains the same, Social Security (SSA) has updated how they share COLA information for 2025. The agency has redesigned the notice to be more user-friendly. The new notice now fits on a single page and uses simple, clear language. It provides personalized information that helps each beneficiary easily understand their specific benefit details. The changes make it simpler to see exactly when new benefits start, how much money you'll receive, and any deductions that might apply.
When will Social Security checks increase?
Increases will go into effect on December 31, 2024, and will be seen by SSDI recipients on the first check of January 2025.
Key Points to Remember:
- Effective Date: December 31, 2024
- First Check with Increase: January 2025
- Average Increase: Approximately $38 per month
For more information, see Social Security's Cola Facts Sheet.
What was the average Cost of Living Adjustment (COLA) over the last decade?
Over the past ten years, the average cost-of-living adjustment (COLA) increase has been approximately 2.83%.
| 2004 COLA | 2.1% |
| 2005 COLA | 2.7% |
| 2006 COLA | 4.1% |
| 2007 COLA | 3.3% |
| 2008 COLA | 2.3% |
| 2009 COLA | 5.8% |
| 2010 COLA | 0.0% |
| 2011 COLA | 0.0% |
| 2012 COLA | 3.6% |
| 2013 COLA | 1.7% |
| 2014 COLA | 1.5% |
| 2015 COLA | 1.7% |
| 2016 COLA | 0.0% |
| 2017 COLA | 0.3% |
| 2018 COLA | 2.0% |
| 2019 COLA | 2.8% |
| 2020 COLA | 1.6% |
| 2021 COLA | 1.3% |
| 2022 COLA | 5.9% |
| 2023 COLA | 8.7% |
| 2024 COLA | 3.2% |
| 2025 COLA | 2.5% |
Where can information on Medicare changes be found?
If you're looking for details on the Medicare changes set for 2025, head over to the official Medicare website. The site provides comprehensive and up-to-date information on any modifications or updates to the program.
