In 2025, over 70 million Americans who receive Social Security will see a 2.5% Cost of Living Adjustment (COLA) in their monthly benefits. This yearly update helps beneficiaries keep pace with inflation and rising living expenses—especially important as prices for basic needs like groceries, utilities, and healthcare continue to climb.
Whether you’re retired, disabled, or a survivor beneficiary, this increase will impact your financial planning for the year.
What Is COLA and Why Does It Matter?
COLA, or Cost-of-Living Adjustment, is an annual change to Social Security payments. It ensures that the purchasing power of your benefits keeps up with inflation. The Social Security Administration (SSA) calculates this adjustment based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
In simple words, if the cost of living goes up, your Social Security check increases so you don’t fall behind financially.
2025 COLA Increase: How Much More Will You Receive?
The 2.5% COLA will give the average Social Security recipient around $50 more per month. That adds up to $600 more per year if you currently receive $2,000 per month.
Here’s a basic idea of what a 2.5% increase looks like:
| Current Monthly Benefit | 2025 Monthly Benefit (2.5% Increase) |
|---|---|
| $1,000 | $1,025 |
| $1,500 | $1,537.50 |
| $2,000 | $2,050 |
| $2,500 | $2,562.50 |
Keep in mind, your exact increase depends on your current benefit amount. People with higher benefits will receive a larger increase, while those with lower benefits will see a smaller one.
When Will the Increase Start?
The new COLA-adjusted payments will begin in January 2025. You’ll receive an official notice from the SSA in December 2024, showing your new monthly benefit amount. If you have a my Social Security account online, you can also check your updated benefit there.
Medicare and Your COLA: What’s the Connection?
While your benefit will increase, keep an eye on Medicare Part B premiums, which are also rising. The 2025 premium is expected to be $185, up from $174.70 in 2024. This means a part of your COLA increase might be used to cover this higher cost.
For example, if your COLA adds $50 to your monthly check, and your Medicare premium goes up by $10, your real increase is closer to $40. Still helpful—but something to plan for.
Does COLA Apply to SSDI and SSI?
Yes! The 2.5% COLA increase applies to all types of Social Security benefits, including:
- Retirement Benefits
- Social Security Disability Insurance (SSDI)
- Survivor Benefits
- Supplemental Security Income (SSI)
For many with disabilities or limited income, even a small increase like this can help cover essential costs.
Can COLA Keep Up with Inflation?
COLA helps, but it doesn’t always match real inflation. Costs for food, rent, and medical care may rise faster than your benefit increase. That’s why many retirees and beneficiaries still feel the pressure, even with COLA adjustments.
This makes it essential to budget wisely and consider additional sources of income or savings.
Tips to Make the Most of Your Social Security Benefits
Here’s how to maximize your benefits and stay financially secure:
- Delay Retirement (if possible): The longer you wait to start your benefits (up to age 70), the more you receive monthly.
- Plan for Taxes: Depending on your total income, you might owe tax on your Social Security. Keeping income under certain limits can help reduce this.
- Work Part-Time: If health and circumstances allow, a part-time job can stretch your monthly income.
- Review SSA Tools: Use the my Social Security portal to track earnings, check your COLA, and plan better.
Useful Tools and Resources
- my Social Security Account: Sign up at ssa.gov/myaccount to view your records, benefits, and COLA updates.
- Social Security Estimator: Estimate your future benefits at ssa.gov/estimator
- Medicare Info: Learn about Medicare coverage and costs at medicare.gov