Social Security COLA for 2025 will be smaller than previous years
Social Security benefits and Supplemental Security Income (SSI) payments will increase by 2.5% in 2025, the lowest increase since 2021. This reflects the cooling level of inflation after a period of historic increases, which forced the adjustment of the cost of livelihood (COLA). ) to its own heights during and after the COVID-19 pandemic.
The benefits, which apply to more than 72 million Americans, will translate into an increase of about $50 monthly. according to the Social Security Administration (SSA).
“Social benefits and SSI payments will increase in 2025, helping tens of millions of people keep up with spending even as inflation begins to cool,” Social Security Commission Martin O’Malley said in a statement.
In addition, the estimated average survivor benefit will increase from $1,788 to $1,832 per month, while Social Security Disability Insurance (SSDI) benefits will increase from $1,542 to $1,580.
According to AARPAlthough the reduction is lower compared to recent years, it will still be welcomed by the program’s beneficiaries.
“Inflation is clearly a priority not just for retirees, but for Americans in general, and the annual COLA provided by Social Security is a critical feature of the system,” said Rob Williams, director of financial planning at Charles Schwabtold AARP.
Despite positive economic news, including moderating inflation and a resilient labor market, this may not translate into improved feelings about the cost of living, Williams added.
The COLA increase in 2024 was 3.2%. In 2023 it was unusually high at 8.7%, while the increase of 5.9% in 2022 was an early signal of the high level of inflation in the economy.
Earlier this year, the SSA updated and expanded the SSI benefits program to expand the definition of a “public assistance household” to include those receiving payments from the Supplemental Nutrition Assistance Program (SNAP) and to households “where not all members receive public assistance received’.
But solvency remains a major, unresolved issue for the Social Security Trust Fund. As of May 2024, the Social Security Board of Trustees revised the expected lifespan for full distributions from the fund so that it will last another year before being depleted in 2035.
More rigorous reforms are needed to better ensure the longevity of the program, and they are Congress is unwilling to address anything because of the political consequences of such a move. Some lawmakers have tried to introduce bills to address the program, but reaching consensus has proven difficult in the current highly polarized political climate.
