Announcement of the 2025 COLA
The Social Security Administration announced on Thursday that the cost-of-living adjustment (COLA) for 2025 will be 2.5%, marking the lowest increase since 2021.
This adjustment will raise average Social Security retirement benefits by roughly $50 per month starting in January, according to the agency.
Social Security benefits and SSI payments will increase in 2025, assisting tens of millions of people in managing expenses as inflation begins to cool.
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.
Comparison to Previous Years
The 2.5% COLA is lower than the 3.2% adjustment Social Security beneficiaries received in 2024, but it remains roughly in line with the historical norm, averaging 2.6% over the last 20 years.
In 2023, beneficiaries experienced an 8.7% increase, the largest since the early 1980s, driven by high inflation.
This adjustment means older Americans will receive needed relief to help better afford essential items from groceries to gas. Inflation took a financial toll this past year, particularly on retirees, who often rely on Social Security as a key source of income. Even with this adjustment, we know many older Americans who rely on Social Security may find it hard to pay their bills.
Challenges for Seniors and Advocacy
The Senior Citizens League, a nonpartisan senior group, highlighted the cost-of-living challenges facing older Americans, citing findings from its 2024 Retirement Survey that 65% of seniors had monthly expenses of at least $2,000—an increase from 55% in 2023.
The survey also indicated that more seniors are spending at least $4,000 or $6,000 per month compared with 2023, while fewer were able to get by on $1,000 or less.
This year represents another lost opportunity to grant seniors the financial relief they deserve by changing the COLA calculation from the CPI-W to the CPI-E, which would better reflect seniors’ changing expenses.
