Retirees to get 2.5% boost to Social Security checks in 2025

Monthly checks for some 72.5 million Americans receiving retirement or disability benefits will increase by 2.5% in 2025, a smaller adjustment than what they received this year after a further slowdown in inflation.

On average, Social Security retirement benefits will increase by almost $50, to $1,976 per month starting in January, the Social Security Administration said Thursday.

The cost-of-living adjustment, known as COLA, will apply to Social Security benefits starting in January, and Supplemental Security Income benefits beginning on Dec. 31. The adjustment that went into effect at the start of this year was 3.2%.

The annual COLA, designed to ensure that the purchasing power of Social Security beneficiaries isn’t eroded by inflation, is calculated from the consumer price index. In the wake of the 2022 inflation surge, the COLA for the following year was 8.7%, the largest in more than three decades.

“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 Martin O’Malley, commissioner of the Social Security Administration, in a statement.

The Social Security Administration bases its annual COLA calculation on the percentage change in the CPI for urban wage earners and clerical workers in the third quarter compared with a year earlier. Those workers cover about 30% of the population, according to the Bureau of Labor Statistics.

Based on the annual adjustment, the maximum amount of earnings subject to the Social Security tax will also increase next year to $176,100, up from $168,600.