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The Social Security Administration announced on Thursday (October 10) that recipients will see a modest 2.5% cost-of-living adjustment (COLA) to their monthly payments in 2025. This increase, which translates to an average of about $50 more per month, will affect nearly 68 million people who receive Social Security payments. The new amounts will start with the January 2025 payments.
This adjustment is a significant decrease from the 8.7% adjustment for 2023, which was the highest in over 40 years and aimed to help senior citizens and people with disabilities cope with the rapid increase in prices at that time. However, the annual boosts have since moderated along with inflation, providing recipients with only a 3.2% bump for this year.
The annual adjustment is based on an inflation metric from the third quarter of the year, which has cooled after being at around a four-decade high two years ago. A related metric, the Consumer Price Index, increased 2.4% in September compared with a year ago, the Bureau of Labor Statistics announced Thursday.
Despite the modest increase, many seniors and their advocates argue that the annual adjustments do not keep up with the rising cost of living, particularly now since prices have remained high even as inflation has ebbed. According to a recent analysis by The Senior Citizens League, an advocacy group, Social Security benefits have lost 20% of their buying power since 2010. Those who retired that year would need a boost of $370 a month, or $4,440 a year, on average, to regain the lost value.
Senior citizens typically don't receive the full adjustment due to Medicare Part B premiums, which are automatically deducted from monthly Social Security benefits. For 2025, the standard monthly premium is expected to be $185, an increase of more than $10 from this year, according to the latest Medicare trustees report.