Social Security recipients will soon experience a welcome change when benefits increase due to a cost-of-living adjustment.
Beneficiaries will receive a 2.5% cost of living adjustment in 2025, which is significantly lower than the average COLA adjustment of 3.2% in 2024. This is the largest increase low since January 2021 – which was 1.3%.
The increase is intended to help address rising prices for food, fuel and other goods and services. The average recipient will see an increase of about $50 per month, according to agency officials. Social Security recipients received a 3.2% increase in their benefits in 2024, and some retirees worry that this year’s increase won’t be large enough to meet their needs.
Beneficiaries will be informed of their new benefit by mail from the beginning of December.
Social Security beneficiaries will begin receiving higher payments in January, according to a news release from the U.S. Social Security Administration.
And this is far from the only change we can expect in the coming months.
Supplemental Security Income recipients will also receive increased payments, scheduled to begin Dec. 31. SSI provides monthly payments to adults and children whose income is below specific financial limits and who qualify for Social Security benefits.
The other big change concerns those who are currently working. The taxable maximum – the maximum amount of income subject to Social Security tax – will increase from $168,600 to $176,100.
According to the Social Security Administration, the taxable maximum changes each year based on changes in the National Average Wage Index.
Are there any other changes?
- The earnings limit for workers who have not reached “full” retirement age will increase to $23,400.
- The income cap for people reaching “full” retirement age in 2025 will be $62,160.
Please note: The full retirement age will be 66 years and 10 months in 2025.
