Social Security Announces 2.5% Benefit Increase for 2025

On October 10, 2024, the Social Security Administration (SSA) announced a 2.5% increase in Social Security benefits and Supplemental Security Income (SSI) payments effective for 2025. This adjustment will impact more than 72.5 million Americans, with Social Security retirement benefits poised to rise by approximately $50 per month on average starting January.

The cost-of-living adjustment (COLA) is designed to counteract inflation. Over the past decade, the COLA has averaged around 2.6%, with a notable increase of 3.2% in 2024. For 2025, about 68 million Social Security recipients will experience the 2.5% increment from January, while approximately 7.5 million SSI recipients will see increased payments beginning December 31, 2024. Some individuals receive both Social Security and SSI benefits.

Social Security Commissioner Martin O'Malley stated, “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.”

Other crucial adjustments tied to average wage increases will also take effect in January 2025. One significant change is the increase in the Social Security tax’s taxable maximum amount, which will rise to $176,100 from $168,600.

Starting in early December, beneficiaries will be informed by mail about their new benefit amounts. This year’s COLA notice features a redesigned, more user-friendly format. The new notice, reduced to a single page, uses plain and personalized language, providing explicit details on payment amounts and any deductions.

Beneficiaries can also view their notices online through their personal Social Security accounts, which is considered more secure and efficient than traditional mail. Those interested in setting up alerts for new messages, such as COLA notices, can do so through their online accounts. To access these features, individuals should have their accounts established by November 20, 2024.

The COLA is calculated based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as defined by the Department of Labor’s Bureau of Labor Statistics. Additional Medicare-related information for 2025 will become available in late November, with the updated Social Security benefit amounts accessible to enrollees through the Social Security Message Center.