2025 Social Security Changes: What You Need to Know About the Upcoming COLA Increase

Starting in January 2025, Social Security benefits and Supplemental Security Income (SSI) payments will increase by 2.5% for over 72.5 million Americans. This cost-of-living adjustment (COLA) is designed to help recipients keep up with rising expenses due to inflation.

The average monthly Social Security retirement benefit will increase by about $50, with the total average monthly check rising to $1,976. For eligible individuals, this translates to a $967 increase in their annual benefits, bringing the total to $11,604.53. Eligible couples can expect an increase of $1,450, taking their annual benefits to $17,404.87.

The COLA is calculated based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the prior year to the corresponding quarter of the current year. This adjustment ensures that the purchasing power of Social Security benefits is not eroded by inflation.

In addition to the COLA increase, the maximum amount of earnings subject to the Social Security tax will rise to $176,100 from $168,600 in January 2025. This change reflects the increase in average wages.

The Social Security Administration (SSA) will begin notifying recipients about their new benefit amounts by mail in early December. The COLA notice has been simplified to use plain and personalized language, making it easier for recipients to understand the changes. Recipients with a my Social Security account can also view their COLA notice online starting in late November.

Payment dates for 2025 will also see some adjustments. SSI beneficiaries will continue to receive payments on the first day of the month, while Retirement, Survivors, and Disability Insurance (RSDI) beneficiaries will follow a schedule based on their birth dates or the date they claimed benefits. For example, RSDI beneficiaries who claimed benefits before May 1997 will receive payments on the 3rd of the month, while those who claimed after May 1997 will receive payments on the second, third, or fourth Wednesday of the month, depending on their birth date.