Social Security benefits will increase 2.5% in 2025, the Social Security Administration announced Thursday.
The increase, which will also benefit Supplemental Security Income recipients, will mean an increase of about $50 a month for 72.5 million Americans.
The increase, known as a cost-of-living adjustment (COLA), takes effect in January.
“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 news release.
Over the last 10 years, the annual update in Social Security benefits has averaged about 2.6%. The increase for 2024 was 3.2%.
The raise for 2025 is the smallest since 2021, when beneficiaries receives a 1.3% bump.
The raise in 2023 was 8.7%, which was the highest increase in more than four decades. Beneficiaries received an increase of 5.9% in 2022.
Those more substantial increases were driven by the highest rate of inflation in decades. Inflation has cooled substantially since reaching a peak of more than 9% two years ago.
The annual cost-of-living adjustments are meant to help Social Security recipients keep pace with rising prices.
Advocacy groups say the raises fall well short of the actual price increase seniors and other beneficiaries are seeing and have pushed for a new way to calculate the hikes.
In addition to the increase in benefits, the maximum amount of earnings subject to the Social Security tax is slated to increase in January, the administration said. The maximum will rise from $168,600 to a new total of $176,100.