Social Security Recipients to See 2.5% COLA Increase in 2025

The Social Security Administration (SSA) has confirmed that over 72.5 million Americans will receive a 2.5% Cost-of-Living Adjustment (COLA) increase in their benefits for 2025, marking the smallest increase since 2021. This adjustment, which reflects cooling inflation rates, will affect both Social Security and Supplemental Security Income (SSI) recipients starting January 2025.

For the average Social Security recipient, this translates to approximately $50 more per month, bringing the average monthly payment to $1,976, up from $1,927 in 2024. SSI beneficiaries will see their federal payment standard rise to $1,012 per month for individuals, while couples can expect up to $1,520.

The timing of these increased payments varies depending on the recipient’s category. SSI beneficiaries will receive their first adjusted payment on December 31, 2024. For other Social Security recipients, the payment schedule is determined by birth dates: those born between the 1st and 10th will receive payments on January 8, those born between the 11th and 20th on January 15, and those born between the 21st and 31st on January 22.

In a significant development, President Biden recently signed the Social Security Fairness Act into law on January 5, 2025. This landmark legislation eliminates two long-standing provisions – the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) – that previously reduced benefits for public sector workers and their surviving spouses. The law will benefit approximately 2.5 million retirees, including teachers, firefighters, and police officers, with some recipients seeing substantial increases in their monthly payments.

The new law’s impact is substantial, with the Congressional Budget Office estimating that eliminating the WEP will increase monthly payments by an average of $360 by December 2025. For those affected by the GPO elimination, benefits could increase by an average of $700 for recipients based on living spouses, and $1,190 for surviving spouses.

Additionally, the Social Security program is implementing other significant changes for 2025. The maximum amount of earnings subject to Social Security tax will increase to $176,100, up from $168,600 in 2024. This adjustment affects high-income earners and helps ensure the program’s continued funding.

However, Medicare Part B premiums will also increase in 2025, potentially affecting the net benefit increase for many recipients. The standard monthly premium for Part B will rise to $185, an increase of $10.30 from 2024, while the annual deductible will increase to $257.

While the 2.5% COLA represents a smaller increase compared to recent years – notably lower than the 3.2% increase in 2024 and the historic 8.7% rise in 2023 – it reflects a stabilizing economy with moderating inflation rates. The adjustment aims to help beneficiaries maintain their purchasing power in the face of rising costs for essential items such as food, housing, and healthcare.