The Social Security Administration has announced the cost of living adjustment for 2025.
Some 72.5 million beneficiaries – 69 million Social Security and 7.5 million SSI recipients and some who receive both- will get a 2.5% boost in benefits next year. Social Security recipients will see the increase on the January payments; SSI’s first higher payment will be Dec. 31, 2024.
“Social Security benefits and SSI payments will increase in 2025, helping tens of millions of people keep up with expenses even as inflation has started to cool,” Martin O’Malley, Commissioner of Social Security, said in a statement.
The increase is lower than the 3.2% beneficiaries received in 2024 but is close to the historical norm of 2.6% received in the past 20 years. During that time, COLAS have ranged from as low as 0 in 2010, 2011 and 2016 and as high as 8.7% in 2023.
The 2.5% increase means the average beneficiary receiving $1,870 per month will see an increase of about $46.80 next year.
More changes
- Maximum amount of earnings subject to Social Security tax, known as the taxable maximum, will increase to $176,100.
- Earnings limit for workers younger than full retirement age increases to $23,400. $1 in benefits will be deducted for each $2 earned over $23,400.
- The earnings limit for people reaching full retirement age in 2025 will increase to $61,160. $1 in benefits is deducted for each $3 over $62,160 until the month the worker reaches full retirement age.
- There is no limit on earnings for workers who are full retirement age or older for the entire year.
You can see the full retirement age information here.
COLAs, designed to prevent benefits from being eroded by inflation, are determined by data from the Consumer Price Index for Urban Wage Earners and Clerical Workers which tracks the average price of a basket of goods. The average CPI-W for the third quarter – July, August and September – of the previous year is compared to the same period of the current year with the difference resulting in the COLA.