2025 COLA – Who Will See the Least Benefit?

Not all Americans receiving Social Security benefits, including SSI (Supplemental Security Income) and SSDI (Social Security Disability Insurance), will see the same boost after the 2025 Cost of Living Adjustment (COLA). The expected COLA for 2025 is projected to be around 2.5%, which is smaller than many anticipated. This adjustment affects each recipient differently depending on the size of their current benefit.

COLA

The COLA is an annual adjustment designed to keep Social Security, SSI, and SSDI payments in line with inflation. The Social Security Administration calculates COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When inflation is high, the COLA increase is larger, but when inflation is lower, the COLA boost shrinks.

For 2025, the 2.5% increase is relatively small compared to the large COLA increases in recent years, such as 2023’s historic 8.7% jump. This smaller increase means that people expecting a significant boost in their benefits will likely be disappointed. But even with the same percentage increase, not everyone receives the same dollar amount due to the varying sizes of benefit checks.

Who Receives the Least

Three main groups of Americans will receive a smaller dollar increase from the 2025 COLA, primarily because their monthly benefits are lower:

1. SSI Recipients: Those on Supplemental Security Income, especially those not receiving the maximum benefit, will see minimal gains.
2. Low-Benefit Social Security Retirees: Retirees receiving smaller Social Security payments due to limited work history or lower lifetime earnings will also see less of a boost.
3. Low-Benefit SSDI Recipients: Individuals receiving Social Security Disability Insurance with smaller monthly checks will get smaller COLA increases.

These groups will see modest increases in their monthly payments because the COLA increase is applied as a percentage. If your check is smaller, the increase will be smaller in dollar terms. For example, if someone receives $500 per month, a 2.5% COLA will add just $12.50, whereas someone getting $2,000 a month will see a $50 increase.

COLA Impact

Let’s break down the potential changes to monthly payments for these groups:

Benefit Type	Current Benefit	After 2.5% COLA	Dollar Increase
SSI Maximum Benefit	$943	$966.50	$23.50
Average SSI Payment	$698	$715	$17
SSI Payment (65 and Older)	$574	$588.50	$14.50
Small Social Security Check	$500	$512.50	$12.50
Larger Social Security Check	$2,000	$2,050	$50

As you can see, people with higher benefits get a larger dollar increase, even though the percentage increase is the same for everyone. This disparity can feel particularly frustrating for recipients who already live on lower monthly payments, as their boost from COLA feels insignificant.

Low-Benefit

The main reason people receiving lower Social Security or SSI payments get a smaller dollar increase from COLA is the fixed percentage applied across the board. Even though everyone gets the same 2.5% increase, it results in very different outcomes depending on how much someone was receiving to begin with.

For example, let’s consider someone receiving SSI benefits. The maximum SSI payment in 2024 is $943 per month. After the 2.5% COLA increase, their payment would rise to $966.50, a boost of just $23.50. But many SSI recipients do not qualify for the maximum benefit because they receive income from other sources, such as retirement or SSDI benefits. The average SSI payment is around $698, and after the 2025 COLA, that would increase to only $715, just $17 more each month.

For individuals aged 65 and older, the average SSI benefit is even lower at $574. After the 2.5% COLA, their payments will increase to about $588.50, giving them an extra $14.50 per month.

Challenges

Many SSI recipients, particularly older individuals and those with disabilities, rely on these modest monthly checks as their primary source of income. With the 2025 COLA increase set to be lower than previous years, these recipients may find that their increased payments still don’t keep up with rising costs for essentials like food, rent, and medical expenses.

SSDI recipients face similar challenges. People with disabilities may have a reduced work history due to their condition, which means they often qualify for lower SSDI payments. With a smaller COLA, these individuals may struggle to make ends meet despite the annual increase.

What to Expect

If inflation remains low, future COLA increases may continue to be modest. Recipients who depend on SSI and SSDI will need to budget carefully, as their benefits may not rise significantly enough to cover growing expenses. Staying informed about changes to Social Security benefits and any potential policy updates can help recipients plan for the future.

In conclusion, while the 2025 COLA increase is expected to be 2.5%, not everyone will experience the same level of financial relief. Those with smaller Social Security, SSI, or SSDI benefits will see only small increases in their monthly payments, making it crucial to manage their budgets wisely.

FAQs