Social Security Recipients to See 2.5% Increase in 2025
- Author: Elizabeth Miller
- Posted: 2024-10-10
Starting in January, the Social Security Administration (SSA) announced a 2.5% Cost-of-Living Adjustment (COLA) for millions of recipients.
This change aims to help retirees, disabled individuals, and other beneficiaries keep up with everyday expenses, despite the gradual cooling of inflation.
For the average retiree, this COLA will mean an extra $50 or so added to their monthly checks.
Around 72.5 million people receive some form of Social Security benefits so this adjustment will have a wide-reaching impact across the U.S. economy.
A Needed Adjustment, but Is It Enough?
Commissioner Martin O’Malley spoke optimistically about the 2.5% increase, noting that it will assist “tens of millions of people in managing expenses even as inflation moderates."
However, many retirees remain concerned that the increase won’t be enough to combat the rising costs of essentials like groceries, housing, and healthcare.
Recent History of COLA Increases
Social Security recipients saw a much larger 3.2% increase in 2024 and a whopping 8.7% bump in 2023—the highest in decades.
These large increases were driven by record-high inflation, which has since cooled down, leading to a more modest adjustment for 2025.
Starting in early December, the SSA will notify recipients of their new benefit amounts via mail, with adjusted payments set to start by January.
For the 7.5 million people receiving Supplemental Security Income (SSI), payments will start as early as December 31.
Future of Social Security
While these annual increases provide temporary relief, the long-term future of Social Security is becoming more uncertain.
The program is primarily funded through payroll taxes, and for 2025, the maximum taxable earnings will increase to $176,100, up from $168,600 in 2024.
However, the Social Security and Medicare Trustees' report released earlier this year painted a concerning picture: by 2035, the Social Security Trust Fund is projected to run dry, leaving the government only able to pay 83% of scheduled benefits unless Congress acts.
For more details on the trustees' report, visit the official Social Security Trustees Report.
What’s Next? Bipartisan Solutions in Debate
AARP CEO Jo Ann Jenkins emphasized the need for further action, stating, “We must do more to ensure older Americans can continue to count on Social Security.”
AARP continues to urge Congress to find a bipartisan solution to strengthen Social Security for the long haul. You can read more about AARP’s efforts here.
As the 2024 presidential election approaches, the future of Social Security has become a key issue in the race.
Both Democratic candidate Kamala Harris and Republican candidate Donald Trump have offered contrasting plans on how to protect the program.
Harris proposed funding Social Security by increasing taxes on billionaires and large corporations. “We need to make sure they pay their fair share to safeguard Social Security,” she said during an AARP interview.
On the other hand, Trump argued that economic growth is the answer. “I don’t want to increase the retirement age or cut benefits. Growth is the answer, and I’ll do nothing to Social Security,” he said.
Photo credit to AP Photo/Jenny Kane, File · Associated Press Finance
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