Social Security Boost – 72.5 Million Americans to Receive a 2.5% Increase, With Retirees Getting an Extra $50

The Social Security Administration (SSA) has officially announced the 2025 Cost-of-Living Adjustment (COLA) increase, leaving mixed feelings among retirees, SSDI, and SSI beneficiaries. While the 2.5% increase provides some financial relief, it falls short of expectations, especially in the face of rising living costs. On average, retirees will see an extra $50 per month, bringing their total monthly benefit to $1,970. However, this modest increase is seen as underwhelming by many.

COLA

Historically, the average COLA increase is around 2.6%, which makes the 2025 COLA of 2.5% slightly lower than usual. For comparison, the 2024 COLA was 3.2%, and even then, many retirees felt it wasn’t enough to keep up with inflation.

With prices for essentials like food, housing, and healthcare continuing to rise, the smaller 2025 increase has left many recipients frustrated and disappointed. While any increase is better than none, it’s clear that many Social Security beneficiaries had hoped for more substantial relief.

Americans Are Affected

The COLA affects millions of Americans across different Social Security and federal assistance programs. Here’s a breakdown of who will benefit from the 2025 COLA increase:

• SSI beneficiaries: Approximately 7.5 million Americans rely on Supplemental Security Income (SSI). The average SSI payment in 2024 was $698, and with the 2.5% increase, it will rise to about $715 in 2025. The maximum SSI payment will increase from $943 in 2024 to $966 in 2025.
• Social Security recipients: A total of 68 million Americans depend on Social Security benefits, including retirees, individuals with disabilities, survivors, and those receiving spousal benefits. Retirees will receive an average of $1,970 per month in 2025—an increase of $50 from the previous year. SSDI (Social Security Disability Insurance) recipients will see their average monthly benefit rise to about $1,577.

Adjustments

Aside from the COLA increase, there are a few other important changes coming in 2025. One notable adjustment is the rise in the taxable maximum (the contribution and benefit base). In 2024, the taxable maximum was $168,600, but in 2025 it will increase to $176,100.

This represents a 4.45% increase, which means that high earners will continue paying Social Security taxes on earnings up to $176,100. Once earnings surpass that threshold, no further Social Security taxes are withheld.

This taxable maximum is particularly important for individuals looking to maximize their future Social Security benefits. To earn the highest possible payment, individuals must have 35 years of earnings covered by Social Security and wait until age 70 to file. For those in this category, the higher taxable maximum could impact both contributions and potential future benefits.

Benefits

For beneficiaries wondering how their payments will change in 2025, the SSA will send a COLA notice detailing the new amounts. To stay ahead, it’s a good idea to sign up for a my Social Security account, where you can check the COLA notice and other important updates online. This allows recipients to better plan for the future and know how these adjustments will impact their monthly payments.

While the 2025 COLA increase is modest, it provides some relief to millions of Americans receiving Social Security and SSI benefits. However, the disappointment among recipients is comprehensible given the lower-than-expected increase and the challenges of keeping up with inflation. With other adjustments like the rise in the taxable maximum, 2025 will bring changes that will impact both high earners and low-income beneficiaries.

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