Social Security increases benefits by 2.5% for 2025

The 2025 Social Security cost-of-living adjustment (COLA) has been announced. 

The Social Security Administration has announced a cost-of-living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income benefits. Nearly 68 million Americans will see the 2.5% increase in their payments beginning in January 2025.

The 2.5% increase aims to help beneficiaries keep up with inflation. Although lower than the 3.2% COLA for 2024 and significantly less than the 8.7% increase in 2023 and 5.9% in 2022, it still provides a welcome boost to recipients’ monthly payments. The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the average change in prices over time that consumers pay for a basket of goods and services. The COLA is designed to ensure that the purchasing power of Social Security and SSI benefits is not eroded by inflation.

According to the Social Security Administration, on average, retired workers currently collect $1,927 per month in Social Security payments, or roughly $23,124 per year. The 2.5% COLA will add about $49 per month to those payments or $588 for the year.

Keep in mind all federal benefits must be direct deposited. So if you haven’t already started receiving benefits, you need to establish electronic transfers to your bank or financial institution. Connect with your advisor to better understand how this COLA adjustment may impact your overall financial plan.

Source: Social Security Administration

The consumer price index for urban wage earners and clerical workers is a monthly measure of the average change over time in the prices paid by urban wage earners and clerical workers for a market basket of consumer goods and services.