Social Security recipients will get a 2.5% cost-of-living increase to their monthly checks beginning in January, the Social Security Administration said Thursday.
The cost-of-living adjustment, or COLA, for retirees translates to an average increase of more than $50 for retirees every month, agency officials said.
Social Security recipients received a 3.2% increase in their benefits in 2024 after a historically large 8.7% benefit increase in 2023, which came as a result of record 40-year-high inflation.
About 72.5 million people, including retirees, disabled people and children, get Social Security benefits.
Martin O’Malley, the commissioner of the federal agency, said the adjustment will help “tens of millions of people keep up with expenses even as inflation has started to cool.”
Even before the announcement, though, some retirees voiced concerns that the increase wouldn’t be enough to counter rising costs.
Sherri Myers, 82, of Pensacola City, Florida, is now hoping to get an hourly job at Walmart to help make ends meet.
“I would like to eat good, but I can’t,” Myers said. “When I’m at the grocery store, I just walk past the vegetables because they are too expensive. I have to be very selective about what I eat — even McDonald’s is expensive.”
The smaller increase for 2025 reflects moderating inflation.
The agency will begin notifying recipients about their new benefit amount by mail starting in early December. Adjusted payments to nearly 7.5 million people receiving Supplemental Security Income will begin on Dec. 31.
The program is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes was $168,600 for 2024, up from $160,200 in 2023. That maximum is slated to increase in 2025 to $176,100.
The national social insurance plan is facing a severe financial shortfall in coming years. The annual Social Security and Medicare trustees report released in May said the program’s trust fund won’t be able to pay full benefits beginning in 2035. If the trust fund is depleted, the government will be able to pay only 83% of scheduled benefits, the report said.
“There is more we must do to ensure older Americans can continue to count on Social Security,” AARP CEO Jo Ann Jenkins said. “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.”
Presidential candidates Kamala Harris and Donald Trump have offered differing plans on how they would strengthen Social Security. AARP conducted interviews with both Harris and Trump in late August, asking how they’d protect the Social Security Trust Fund. Harris said she would make up for the shortfall by “making billionaires and big corporations pay their fair share in taxes and use that money to protect and strengthen Social Security for the long haul.” Trump said: “We’ll protect it with growth. I don’t want to do anything having to do with increasing age. I won’t do that. As you know, I was there for four years and never even thought about doing it. I’m going to do nothing to Social Security.”