The Social Security Cost of Living Adjustment (COLA) for 2025 will be 2.5%. The modest increase was expected: COLA is tied to third-quarter inflation, which has cooled. Starting in early December, beneficiaries will receive statements from the Social Security Administration detailing their exact increase in benefits. This year’s statements will be easier to read and only one page long, the agency says. Over seventy million Americans receive Social Security.
The 2025 COLA is the smallest since 2021. For the average beneficiary, it translates into about $50 more per month. Senior advocates argue that it is not large enough to allow seniors to keep up with inflation. For one thing, rising Medicare B payments will shave dollars off the increase. The standard Medicare B premium, currently $174.70, is expected to be $185 next year. Premiums will be even more for high income earners.
Second, critics have long contended that the annual adjustment cannot keep pace with inflation because of a fundamental flaw: it is based on the wrong benchmark, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W, they argue, does not accurately reflect the expenses of most seniors, which are heavily skewed by health care expenses. Instead, they propose using a different standard, the Consumer Price Index for Elderly Consumers (CPI-E). The executive director of the nonprofit Senior Citizens League, Shannon Benton, says of the 2025 COLA: “This year represents another lost opportunity to grant seniors the financial relief they deserve by changing the COLA calculation from the CPI-W to the CPI-E, which would better reflect seniors’ changing expenses.”
Only Congress can change the way COLA is calculated. That has not happened despite many legislative attempts to do so.
For a fact sheet with all 2025 Social Security adjustments, including the maximum on taxable earnings, click here.
