Beneficiaries of the Social Security program will get a 2.5% Cost of Living Adjustment (COLA) by the year 2025-on the order of an increase of close to $50 per month in the benefits received.
Over the subsequent 12 months, this increase would generate approximately $600 for the average recipient. The overall impact of the COLA increase is likely to be offset by rising Medicare premiums.
If you are among the 70 million Americans receiving Social Security benefits, the guide lays out what you should know: the amount you will receive, when the payments will be adjusted, and how you should plan for the changes.
Social Security COLA 2025 Overview
| Key Topic | Details |
|---|---|
| COLA Increase | 2.5% in 2025 |
| Average Monthly Increase | Around $50 |
| Estimated Annual Increase | $600 (based on a $2,000 monthly benefit) |
| Impact on Medicare | Expected increase in Part B premium to $185/month |
| Effective Date | January 2025 |
| How to Check New Benefit | Social Security Notice (Dec 2024) or SSA website |
Why Are Social Security Benefits Increasing in 2025?
- Annual Level Adjustment of the Benefits Provided by the
Social Security Administration (SSA) will be based on the Cost-of-
Living Adjustment (COLA). - The payments by benefits are supposed to keep pace with inflation and not to lose purchasing power over beneficiaries.
- The COLA is determined from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), Consequently, it measures changes in the prices of goods and services.
- While, since inflation continues to take its toll on per-day expenditures, the SSA has given a green light to a 2.5% COLA hike for 2025.
How Much Will My Social Security Check Increase?
The actual payments adjustment differs from current monthly benefits: Thus, estimated increases as follows:
| Current Monthly Benefit | New 2025 Monthly Benefit | Annual Increase |
|---|---|---|
| $1,500 | $1,537 | $444 |
| $2,000 | $2,050 | $600 |
| $2,500 | $2,562 | $744 |
| $3,000 | $3,075 | $900 |
| $4,000 | $4,100 | $1,200 |
Your exact increase in cost of living adjustment will depend on your benefit amount and individual deductions such as your Medicare Part B premiums, among others.
When Will the COLA Increase Go Into Effect?
The new increase in COLA will go into effect in January of 2025 and will be visible immediately in your first payment of the new year.
The Social Security Administration will notify you by mail and online in December 2024 of the new monthly benefit amount applicable to you.
How Will Medicare Affect Your COLA Increase?
Though COLA does give you an increment in benefits, some of it can be offset by Medicare premiums.
- The Medicare Part B Premiums Are Going Up
- For 2024, Medicare Part B Premium: $174.70/month
- For 2025, Medicare Part B Premium Estimate: $185/month
- Premium Increase: $10.30/month
The premium for those enrolled in Medicare Part B is directly deducted from Social Security benefits. This means that even with a higher benefit amount, the net increase will be a little lower after Medicare deductions.
For Example:
If you get a COLA of $50 in your Social Security check and then lose $10.30 due to increased Medicare Part B premium, your real increase would be about $40-$45.
How to Check Your New 2025 Social Security Benefits
To find out the amount of the new 2025 Social Security benefit due to you, the following steps may guide you for the same:
- Your COLA Notice (December 2024)
The SSA sends official COLA notices to every beneficiary in December 2024, which would carry the updated benefit amount. - Logging Into Your Social Security Account
You can view your updated benefit statement online at My Social Security at ssa.gov. - By Calling the Social Security Administration
You may also reach out to them for your specific case and clarify on the phone at the SSA at 1-800-772-1213.
How Has COLA Changed Over The Years?
Cost-of-Living Adjustments (COLA) changes every year with respect to inflation trends. Below is the summary for the latest COLA increases:
| Year | COLA Increase |
|---|---|
| 2025 | 2.5% |
| 2024 | 3.2% |
| 2023 | 8.7% (highest since 1981) |
| 2022 | 5.9% |
| 2021 | 1.3% |
The COLA increase of 2.5% in 2025, considerably below increases seen in 2022 and 2023, would probably go slightly with a reduction in the inflation rate.
How the COLA affects the different Social Security benefits?
This COLA increase affects all kinds of benefits paid under the Social Security program:
- Retirement Benefits – The retired worker now stands to receive a 2.5 percent increase.
- Social Security Disability Insurance (SSDI)-Correspondingly, the amount of the 2.5 percent COLA increase also covers national safety net disability.
- Supplemental Security Income (SSI): Supplemental Security Income recipients will also have a higher amount due to the COLA adjustment.
- Survivor Benefits-Widows, widowers, and dependents will receive their benefits adjusted upward.
What if COA is not matched up Inflation? The cost of living adjustment cannot help retiree and other fixed-income customers.
- Health costs
- Housing costs
- Grocery costs
Transportation will rise over the standard increase in COLA, making it difficult for retirees and others to meet their expenses.
Tips to Maximize Your Social Security Benefits:
Delay Your Benefits (If Possible)
Retiring delays up to seventy years with Social Security will yield an annual increase of 8% after reaching full retirement age.
Reduce the tax impact on your Social Security benefits. Part of the income from Social Security may be taxable according to total income. A proper planning will minimize income tax liabilities.
Part-time Work Working part-time, if possible, might lead to additional income and help those who collect Social Security benefits.
Examine Medicare Expenses
Consider getting Medicare Advantage or Supplemental Insurance work for rising health costs.
The 2.5% COLA rise for 2025 will be a great boon to many Social Security beneficiaries.
With an average annual increase of about $600, the next thing is how much more will be subtracted for Medicare premiums going into one’s budgets for the next year.
To find the exact amounts of the COLA increase, the site ssa.gov will be used or My Social Security will be logged in from December 2024.
FAQS:
What does it mean to have a 2025 Social Security COLA?
Effective January 2025, the 2025 COLA represents an increase of 2.5 percent in Social Security advantages helping beneficiaries alleviate the impact of inflation on their pinched budgets.
To what degree will my benefits increase in 2025?
On average, Social Security retirement benefits will increase by about $50 per month, from $1,927 in 2024 to $1,976 in 2025.