Social Security Recipients Will Receive a 2.5% COLA Increase in 2025

WASHINGTON (AP) — Millions of Social Security recipients are getting one 2.5% higher cost of living for their monthly checks starting in January, the Social Security Administration announced Thursday.

The Cost of Living Adjustmentor COLA, for retirees means an average increase of more than $50 each month, agency officials said.

Um 72.5 million People including pensioners, disabled people and children receive social security benefits.

But even before the announcement, retirees expressed concerns that the increase would not be enough to address rising costs.

Sherri Myers, an 82-year-old retiree from Pensacola City, Florida, is now hoping to get an hourly job at Walmart to make ends meet.

“I would like to eat well, but I can't. When I'm in the supermarket, I just walk past the vegetables because they're too expensive. I have to be very selective about what I eat – even McDonald's is expensive,” she said.

The recipients received one 3.2% increase in their performance in 2024, after a historically large Performance increase of 8.7% in 2023, according to the filing 40 years of high inflation.

The smaller increase for 2025 reflects easing inflation.

Social Security Commissioner Martin O'Malley told the Associated Press that the upcoming increase will provide some relief for recipients as inflation has cooled and the agency is serving a record number of retirees while funding is at historic lows.

His message to those who feel the adjustment isn't enough: “You're not wrong.”

“I’ve heard the stories and it’s a struggle for seniors,” he said, adding that “as they age, they have to spend their money on a number of other costs and expenses, including prescription medications.”

He said the measures pushed by the Biden-Harris administration should result in many people seeing lower costs for prescription drugs.

The agency will notify recipients of their new benefit amount by mail beginning in early December. The adjusted payments to nearly 7.5 million people receiving Supplemental Security Income will begin Dec. 31.

The program is funded by payroll taxes collected from workers and their employers and is expected to increase to $176,100. The maximum amount of income subject to Social Security payroll taxes was $168,600 in 2024, up from $160,200 in 2023.

The announcement comes at a time when the state's Social Security system will face a significant financial deficit in the coming years.

The Annual Trustees for Social Security and Medicare Report published in May said that starting in 2035, the program's trust fund will no longer be able to pay full benefits. When the trust fund is depleted, the government will only be able to pay 83% of planned benefits, the report said.

AARP CEO Jo Ann Jenkins said in a statement: “We must do more to ensure older Americans can continue to count on Social Security.” AARP continues to call on Congress to take bipartisan action to strengthen Social Security strengthen and ensure a long-term solution that Americans can rely on.”

The presidential candidates, Democrat Kamala Harris and Republican Donald Trump, have presented dueling plans to strengthen Social Security.

AARP conducted Interviews with Harris and Trump at the end of August and asked how the candidates would protect the Social Security Trust Fund.

Harris said she would make up the deficit by “forcing billionaires and big corporations to pay their fair share of taxes and use that money to protect and strengthen Social Security over the long term.”

Trump said, “We're going to protect it through growth.” I don't want anything to do with aging. I won't do that. As you know, I was there for four years and never thought about doing it. I’m not going to do anything to Social Security.”

O'Malley said there is a push for the Social Security Administration to use a different index to calculate cost of living increases that measures price changes based on older people's spending patterns on things like health care, groceries and drug costs.

The COLA is now calculated using the consumer price index, a basket of consumer goods and services. O'Malley said lawmakers committed to change are “pushing very solid policy.”