Social Security's annual COLA increase was announced earlier this week and as expected from experts' predictions, it is lower than the COLAs of the past two years. This will translate into a small increase in monthly payments for beneficiaries.
The administration said the 72.5 million Social Security benefit recipients will see a 2.5% cost-of-living adjustment on their checks for 2025, starting in January. The annual adjustment will bring an increase in monthly beneficiary payments for those receiving Social Security benefits, including retirement, survivors, Social Security Disability Insurance and Supplemental Security Income.
The administration uses COLA to adjust Social Security beneficiaries' annual benefits. The 2.5% increase in 2025 is smaller than the 3.2% increase in 2024 and the 8.7% jump in 2023 and is a reflection that inflation is cooling down.
Beneficiaries should receive a new COLA notice in December of this year with details of the adjustment. If you signed up for a My Social Security account, you'll find the notice in the Message Center when you log in.
Below, we'll break down the details of the COLA increase in 2025 and what it means for you.
For more information, here's our essential Social Security cheat sheet and don't miss the Social Security payment schedule and how to enroll in Social Security Disability Insurance.
What is the Social Security COLA?
The Social Security Administration determines the COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers, which is a measure of the average change in the prices of consumer goods and services, released monthly by the Bureau of Labor Statistics. The administration uses the COLA to adjust the annual benefits paid to Social Security beneficiaries and Supplemental Security Income beneficiaries.
Announced in October, the COLA comes into force in January of the following year.
What government benefits adjust using COLA?
Social Security is not the only government benefit affected by the COLA. Social Security Disability Insurance, Supplemental Security Income, Medicare, and the Supplemental Nutrition Assistance Program (including food stamps and other programs) use COLA to account for inflation when setting benefits.
Here's What a 2.5% COLA Means
We have been following experts' predictions before COLA's official announcement, and those predictions were correct. The Senior Citizens League, a nonpartisan senior advocacy group, had predicted a 2.5% COLA increase last month, and that's exactly where the official COLA landed.
The Seniors League predicts a COLA of 2.5% to 2.7% from the beginning of the year and highlights that seniors are disappointed that the CPI-W cannot measure inflation as they experience it. The league stated that in a recent survey of 3,000 older Americans, 72% reported that changing the COLA calculation to an index that better reflects seniors' variable costs should be a top priority for Congress.
“Our research shows that 67% of seniors depend on Social Security for more than half of their income and that 62% fear that their retirement income will not even cover essential needs such as groceries and medical expenses.” TSCL Executive Director Shannon Benton said in a statement about the latest COLA announcement.
Several factors can affect the amount of money you receive in your monthly check, but the 2.5% increase will go to the 72.5 million Americans who receive Social Security and Supplemental Security Income. A 2.5% increase in the COLA will increase the average monthly benefit by about $48 per month. The 2025 COLA is lower than the 3.2% in 2024 and much lower than the 8.70% increase in 2023.
COLA increases 2020 – 2025
| Year | COLA increase | % change compared to the previous year |
|---|---|---|
| 2025 | 2.50% | -0.70% |
| 2024 | 3.20% | -5.50% |
| 2023 | 8.70% | 2.80% |
| 2022 | 5.90% | 4.60% |
| 2021 | 1.30% | -0.30% |
| 2020 | 1.60% |
For more information, find out what to do if you never received your Social Security check and how to determine your Social Security benefits with this free tool.
