Social Security COLA 2025 increase announced: What to know
NEW YORK - Social Security recipients will receive a 2.5% increase in their monthly checks in 2025.
The cost-of-living adjustment, or COLA, was announced on Thursday. Analysts had predicted a 2.5% bump for 2025, which is smaller than increases in the previous two years and reflects moderating inflation.
Recipients received a 3.2% increase in their benefits in 2024, after a historically large 8.7% benefit increase in 2023, brought on by record 40-year-high inflation.
Social Security COLA increase for 2025
About 70.6 million people participate in the Social Security program, with an average benefit of about $1,920 a month.
The AARP estimated that a 2.5% COLA would increase that by $48 a month.
In advance of the announcement, retirees voiced concern that the increase would not be enough to counter rising costs.
Sherri Myers, an 82-year-old Pensacola City, Florida, retiree, is now hoping to get an hourly job at Walmart to help make ends meet.
"I would like to eat good but I can’t. When I’m at the grocery store, I just walk past the vegetables because they are too expensive. I have to be very selective about what I eat — even McDonald’s is expensive," she told the Associated Press.
With increased participation and fewer workers contributing, the Social Security program faces a severe financial shortfall in the coming years. The annual Social Security and Medicare trustees report released in May said the program’s trust fund will be unable to pay full benefits beginning in 2035.
If the trust fund is depleted, the government will be able to pay only 83% of scheduled benefits, the report said.
The program is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes was $168,600 for 2024, up from $160,200 in 2023. Analysts estimate that the maximum amount will go up to $174,900 in 2025.
What Trump, Harris have said about Social Security
The COLA increase announcement comes as the two presidential candidates, Democratic nominee Vice President Kamala Harris and Republican nominee former President Donald Trump, have each presented plans on how they would strengthen Social Security.
Harris says on her campaign website that she will protect Social Security by "making millionaires and billionaires pay their fair share in taxes."
Trump, the Republican nominee, promises that he would not cut the social program or make changes to the retirement age. Trump also pledges tax cuts for older Americans, posting on Truth Social in July that "SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!"
AARP conducted interviews with both Harris and Trump in late August, and asked how the candidates would protect the Social Security Trust Fund.
Harris said she would make up for the shortfall by "making billionaires and big corporations pay their fair share in taxes and use that money to protect and strengthen Social Security for the long haul."
Trump said, "We’ll protect it with growth. I don’t want to do anything having to do with increasing age. I won’t do that. As you know, I was there for four years and never even thought about doing it. I’m going to do nothing to Social Security."