Starting January 2025, Social Security recipients will see an increase in their monthly benefits, thanks to the annual cost-of-living adjustment (COLA). This adjustment, designed to help keep payments in line with inflation, has been a cornerstone of Social Security since it was first implemented in 1975.
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How Much Will Benefits Increase?
- The average retirement benefit will rise by $49 per month, going from $1,927 to $1,976.
- The maximum monthly benefit for those retiring at the Full Retirement Age of 67 will climb to $4,018.
- Those who delay retirement until age 70 could receive as much as $5,108 per month.
Keep in mind that these maximum benefits depend on your lifetime earnings, and most retirees won’t receive the top amount available.
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Programs Benefiting from COLA
The COLA doesn’t just apply to retirement benefits. All SSA-administered programs will see an increase, including:
- Retirement benefits (including spousal benefits).
- Survivor benefits.
- Supplemental Security Income (SSI).
- Social Security Disability Insurance (SSDI).
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When Will the Increased Payments Arrive?
- SSI beneficiaries: The first increased payments will be distributed on December 31, 2024, due to the January 1 federal holiday.
- All other recipients: Boosted payments will begin in January, with the schedule as follows:
- Recipients who started collecting before May 1997 or receive SSI will see their payments on Friday, January 3.
- Payments for others will be issued on Wednesdays throughout the month, based on their birth date.
What Experts Are Saying
- Mary Johnson, independent Social Security and Medicare policy analyst:
“The 2025 COLA will be the lowest since 2021, at 2.5%. However, even with this modest increase, beneficiaries will still face challenges from high costs on essentials like housing, meats, and auto insurance.” - Jo Ann Jenkins, AARP CEO:
“This adjustment provides much-needed relief for older Americans struggling with inflation. Social Security is the primary income source for 40% of retirees. Even with the COLA, many will still find it difficult to cover basic expenses.”
Looking Ahead to Future Adjustments
The 2025 COLA will remain in effect for the entire year. The next potential adjustment will be announced in October 2025, applying to benefits starting in January 2026.
What This Means for You
The COLA adjustment is designed to protect purchasing power for retirees and beneficiaries, but with ongoing inflation, some may find the increase insufficient to meet rising costs. Staying informed and planning accordingly can help beneficiaries navigate financial challenges in the coming year.
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