Social Security and SSI Benefits to See 2.5% COLA Increase in 2025

The Social Security Administration (SSA) has announced a 2.5% cost-of-living adjustment (COLA) for both Social Security and Supplemental Security Income (SSI) benefits, effective January 2025. This increase, although smaller than the 3.2% COLA in 2024 and the 8.7% in 2023, aims to help beneficiaries keep pace with inflation.

Nearly 68 million Social Security beneficiaries will see this increase in their monthly payments, with the average monthly benefit for retirees expected to rise by about $50, bringing the average payout to $1,976 per month. This adjustment is based on the consumer price index and is designed to maintain the purchasing power of these federal benefits over time.

Recipients of SSI, a federal safety net program for seniors and people with disabilities, will also benefit from this COLA. The maximum monthly federal SSI payout will increase from $943 to $967 per individual, affecting approximately 7.5 million recipients.

In addition to the COLA, the SSA has announced other changes for 2025. The Social Security wage base will increase to $176,100, up from $168,600 in 2024, meaning that earnings up to this limit will be subject to the 6.2% OASDI tax. The maximum Social Security benefit for a worker retiring at full retirement age will increase to $4,018 per month, up from $3,822 in 2024.

Beneficiaries can expect to receive notifications from the SSA in December outlining the specific changes to their monthly benefits. These notifications can also be accessed online through the my Social Security account starting in December.