The Social Security Administration has announced a 2.5 percent boost to benefits for 2025—in line with forecasters’ predictions.
The Cost of Living Adjustment, more commonly known as COLA, increases benefits administered by the SSA on a yearly basis. The COLA is designed to keep Social Security retirement, survivor and disability payments in line with inflation, so that purchasing power is not eroded over time.
The first adjusted payments will be made in January 2025 for retirement benefits, and for those who collect Supplemental Security Income (SSI), benefits will be increased in December this year.
Each year, the COLA is based on the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter of the current year and the average in the same period of the previous year. If any increase occurs, that percentage is rounded to the nearest 10th of 1 percent, and becomes the annual COLA.
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The 2025 COLA was expected to be less than previous years, owing to inflation reducing throughout 2024 so far. Inflation has tracked downward from 3.7 percent in September last year to 2.3 percent this September this year.
The COLA for 2023 was the largest ever, with seniors getting an 8.7 percent annual raise following a period of high inflation, which reached a high of 9.2 percent in 2022.
The COLA 2024 boosted benefits 3.2 percent.
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Social Security advocates and experts have stressed the importance of the new COLA.
“The COLA is a vital component of Social Security, ensuring older Americans have an inflation protected source of income in retirement,” AARP’s CEO Jo Ann Jenkins said in a statement to Newsweek.
“This adjustment means older Americans will receive needed relief to help better afford essential items from groceries to gas. Inflation took a financial toll this past year, particularly on retirees, who often rely on Social Security as a key source of income. Even with this adjustment, we know many older Americans who rely on Social Security may find it hard to pay their bills. Social Security is the primary source of income for 40 percent of older Americans.
“While this adjustment is important, there is more we must do to ensure older Americans can continue to count on Social Security. AARP continues to call on Congress to take bipartisan action to strengthen Social Security and secure a long-term solution that Americans can rely on,” Jenkins continued.
More to follow.
