Social Security benefits are increasing for all recipients in January 2025 thanks to the cost-of-living adjustment.
The cost-of-living adjustment, commonly referred to as COLA, has been a long-standing element of Social Security benefits. Lawmakers first put it in place in 1975, and it is designed to keep payments in line with inflation so that purchasing power is not eroded over time.
Thanks to the COLA, the estimated average retirement benefit will increase by $49 a month, from $1,927 to $1,976, the SSA has said.
The maximum amount available to retirees who stop working at the Full Retirement Age of 67 is $4,018. If you retire at age 70, you could get as much as $5,108 per month. Most retirees, however, do not receive the maximum benefit available, which is dependent on how much you earned during your working years.
Still, all SSA-administered benefit and welfare programs are subject to the annual COLA:
The first increased checks for retirement benefits will actually begin in December. SSI beneficiaries will see their increased amounts paid on December 31, slightly earlier than usual due to the regular payment date of the 1st being a federal holiday.
For everyone else, boosted benefits will begin in January. First up will be those who have been receiving Social Security since prior to May 1997 or who also collect SSI payments getting their money on Friday, January 3. From then onward, retirement payments will be issued on Wednesdays throughout the month.
Independent Social Security and Medicare policy analyst Mary Johnson: "The 2025 COLA will be the lowest received by Social Security beneficiaries since 2021, at the same time inflated prices persist on key essentials such as housing, meats, auto insurance, any type of service and repairs. Despite it being the lowest COLA since 2021, a 2.5 percent COLA would be considered about average."
AARP CEO Jo Ann Jenkins, in a statement to Newsweek: "This adjustment means older Americans will receive needed relief to help better afford essential items from groceries to gas. 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. Social Security is the primary source of income for 40 percent of older Americans.
There will be no more increases to Social Security benefits for the rest of the year, as the COLA applies from January through to December. Another potential boost will be announced by the SSA in October 2025, and will be applicable to benefits paid in 2026.