The Social Security Administration (SSA) has announced a 2.5% cost-of-living adjustment (COLA) to benefit checks starting in 2025, marking the smallest increase since 2021. This adjustment will affect the 68 million Americans who receive monthly Social Security benefits, with retirees relying heavily on these checks as a major source of income.
What is the Social Security COLA?
The Social Security COLA is an annual adjustment aimed at helping beneficiaries keep up with inflation. It is calculated based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Over the years, the COLA has fluctuated in response to inflation rates. For instance, post-pandemic inflation led to a higher COLA of 8.7% in 2023. However, inflation has cooled, and the 2025 COLA has dropped to 2.5%. This is a significant decrease from the 3.2% increase in 2024.
How Much Will Benefits Increase?
The 2.5% COLA translates into an average increase of $48 per month for retirees, raising the average Social Security check to $1,968. The adjustment comes as inflation has slowed, with the September 2024 Consumer Price Index showing just a 2.4% rise in prices from the previous year. For more details on the SSA’s COLA update, visit CNBC’s coverage.
Other Social Security Changes in 2025
Beyond the COLA, other adjustments will also take effect in 2025. To qualify for retirement benefits, individuals must earn 40 work credits. In 2025, earning one credit will require wages or self-employment income of at least $1,810, up from $1,730 in 2024. Additionally, the maximum earnings subject to Social Security tax have increased to $176,100 from $168,600.
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When Will You See the Increase?
Most beneficiaries will see the COLA reflected in their January 2025 checks. The exact date depends on your birthdate, but for many, the increase will appear on either January 8, 15, or 22, 2025.