Social Security cost-of-living adjustment will be 2.5% in 2025, less than prior year

The Social Security Administration on Thursday announced that the cost-of-living adjustment for 2025 will be 2.5%, the lowest since 2021.

Social Security retirement benefits, on average, will increase by roughly $50 per month starting in January, the agency said.

“Social Security benefits and SSI payments will increase in 2025, helping tens of millions of people keep up with expenses even as inflation has started to cool,” said Social Security Commissioner Martin O’Malley.

AMERICANS REVEAL THEIR BIGGEST FINANCIAL REGRET ABOUT POTENTIAL RETIREMENT

The 2.5% COLA is less than the 3.2% adjustment that Social Security beneficiaries received in 2024, but would be roughly in line with the historical norm – as it’s averaged 2.6% over the last 20 years.

“This adjustment means older Americans will receive needed relief to help better afford essential items from groceries to gas,” AARP CEO Jo Ann Jenkins said in a statement. “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.”

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In 2023, beneficiaries saw an 8.7% increase, the largest since the early 1980s, due to high inflation.

The Senior Citizens League, a nonpartisan senior group, noted the cost of living challenges facing older Americans and cited findings from its 2024 Retirement Survey that found 65% of seniors had monthly expenses of at least $2,000 – an increase from 55% in 2023.

That survey found that more seniors are spending at least $4,000 or $6,000 per month compared with 2023, while fewer were able to get by on $1,000 or less.

“This year represents another lost opportunity to grant seniors the financial relief they deserve by changing the COLA calculation from the CPI-W to the CPI-E, which would better reflect seniors’ changing expenses,” Shannon Benton, executive director of The Senior Citizens League, said in a statement on Thursday.