As 2025 approaches, millions of Social Security beneficiaries, including seniors, military retirees, and disabled veterans, are preparing for the upcoming Cost of Living Adjustment (COLA). The Social Security Administration (SSA) has announced a 2.5% increase for 2025. This adjustment, while smaller than previous years, is aimed at helping recipients keep pace with rising living costs.
Jenny Kane/AP/File
Understanding the 2025 COLA Increase
The 2.5% COLA will go into effect in January 2025, applying to Social Security retirement benefits, disability payments, and Supplemental Security Income (SSI). This increase is designed to offset inflation, which is calculated by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Beneficiaries can expect their benefits to rise slightly, but the full impact will depend on individual circumstances such as birthdate and type of benefits received.
For an average Social Security recipient, this will translate to an increase of around $50 per month, raising the monthly average to approximately $1,976.
Social Security Payment Schedule for 2025
Social Security payments are made based on the recipient’s birthdate:
- 1st to 10th: Payments made on the 2nd Wednesday of the month
- 11th to 20th: Payments made on the 3rd Wednesday of the month
- 21st to 31st: Payments made on the 4th Wednesday of the month
Disabled veterans and military retirees will also benefit from this COLA increase. For veterans with a 10% disability rating, this means an additional $4.28 per month, while those with a 100% rating can expect $93.45 more per month.
Financial Planning and Preparations
Though the 2.5% increase may help, many retirees and veterans are concerned about rising costs, particularly for essential items like groceries, medical expenses, and housing. Seniors are advised to use this time to review their budgets and make adjustments to manage the modest increase in benefits. Opting for direct deposit and keeping personal information up to date are simple ways to ensure quicker access to funds.
For those affected by the COLA, it’s also crucial to stay informed about changes in Medicare premiums, which could erode some of the benefit increase. In 2025, Medicare Part B premiums are expected to rise by more than $10, cutting into the COLA adjustment for many beneficiaries.
Challenges Ahead for Social Security Recipients
While the COLA is designed to offset inflation, many recipients feel that it does not fully account for the true cost of living, particularly with persistent price increases for basic necessities. Over the last five years, Social Security benefits have lost about 20% of their buying power. Despite the COLA adjustments, inflation continues to outpace the benefits many seniors rely on for daily expenses.