The long-awaited 2025 cost of living adjustment (COLA) for Social Security benefits has been revealed, showing a 2.5% increase in payments. Although smaller than the previous adjustments of 3.2% in 2024 and 8.7% in 2023, the increase will still provide some relief to beneficiaries as inflation continues to affect daily expenses. With inflation slowing down, this modest increase may not be as concerning for retirees as it initially seemed.
Increase
The 2.5% increase may not seem large, but it’s essential to know that the COLA is designed to help Social Security beneficiaries keep pace with inflation, not to dramatically improve their financial situation. Social Security benefits, particularly retirement benefits, were never meant to replace a full income but rather provide about 40% of pre-retirement earnings.
How can you calculate how much more you’ll receive? The formula is simple. Just multiply your current payment by 25 and then divide by 100. The result is your increase. Then, add this number to your current benefit to get your new monthly total.
For instance, a retiree who currently receives the average monthly benefit of $1,920.48 will see an increase of around $48.01, bringing their new monthly total to $1,968.49.
| Current Benefit | Increase (2.5%) | New Benefit |
|---|---|---|
| $1,920.48 | $48.01 | $1,968.49 |
This increase may seem small, but it’s a direct reflection of slowing inflation, which may ultimately benefit retirees.
Survivor Benefits
Survivor benefits are also adjusted by the 2.5% COLA. These payments help the children and spouses of deceased workers cover their living expenses. For example, children of a deceased worker will receive an average monthly benefit of $1,131.18, while widowed spouses will get an average of $1,318.31.
| Beneficiary | 2025 Benefit |
|---|---|
| Children of deceased | $1,131.18 |
| Widowed spouses | $1,318.31 |
| Nondisabled widows | $1,829.17 |
| Disabled widows | $950.90 |
| Parents of deceased | $1,660.08 |
Spousal Benefits
Disability Insurance beneficiaries will also see an increase. Those receiving these benefits will get an average of $1,578.42 per month, while their spouses or primary caregivers will receive $432.12. Dependent children of disabled workers will get $504.33.
Spousal benefits, which are paid to the spouse of a retired worker, are calculated as 50% of the retiree’s benefit. This means that the average spousal benefit will rise to $932.52 per month in 2025.
Changes
Supplemental Security Income (SSI) recipients are not left out of the increase. Adults receiving SSI will see their payments rise to about $715.97 per month. Children under 18 will receive $841.22, while those aged 65 and older will get a new average payment of $589.45.
| SSI Recipient | 2025 Benefit |
|---|---|
| Adults | $715.97 |
| Children (under 18) | $841.22 |
| Recipients 65+ | $589.45 |
An interesting quirk is that SSI payments for January 2025 will actually be distributed on December 31, 2024, due to the New Year’s Day holiday.
Retirees
While the 2.5% COLA for 2025 may not result in a huge bump in benefits, it is designed to keep up with the current rate of inflation. It won’t make anyone rich, but it helps prevent Social Security payments from losing too much purchasing power. As always, Social Security is not intended to cover all retirement expenses but serves as a supplement, replacing about 40% of pre-retirement income.
Although some may argue that these increases come too late to replenish savings depleted by inflation, the goal of COLA is simply to help retirees and other beneficiaries keep pace with the rising cost of living.
FAQs
What is the COLA for Social Security in 2025?
The 2025 COLA is a 2.5% increase.
How do I calculate my new Social Security benefit?
Multiply your current benefit by 2.5% and add the result to your current amount.
Will survivor benefits increase with the 2025 COLA?
Yes, survivor benefits will rise by 2.5%.
When will the first 2025 SSI payment arrive?
The first payment will be deposited on December 31, 2024.
Are disability benefits affected by the 2025 COLA?
Yes, disability benefits will increase by 2.5%.
