The Cost-of-Living Adjustment (COLA) will make people in the United States who get Social Security retirement or disability benefits more money every month in 2025. The Social Security Administration (SSA) confirmed this change in October.
It will be a 2.5% increase. All people who get benefits will get a boost from COLA, but not everyone will get the same amount.
The change is based on the type of benefit and the amount that each person already gets. Let’s look at how COLA will change benefits from Social Security in 2025 and who stands to gain the most.
The COLA adjustment and its impact on retirement and disability benefits
The Cost-of-Living Adjustment is meant to help Social Security benefits keep up with the cost of living. The SSA looks at this change every year and uses the consumer price index (CPI) to figure out how much benefits should go up.
The adjustment rate for 2025 is set at 2.5%, which means that everyone who gets Social Security benefits will have more money coming in each month. But the exact amount of the rise will be different for each person.
The SSA is in charge of three main types of benefits: retirement, SSDI (Social Security Disability Insurance), and SSI (Supplemental Security Income).
Because each of these programs helps a different group of people with different needs and levels of income, the amount of money they get will depend on the type of benefit they are getting and how much they already get.
Supplemental Security Income (SSI): the lowest benefit level
SSI has the lowest maximum benefit amount and is meant to help people with disabilities, blindness, or who are over 65 and don’t have much money. The most a single person can get from SSI each month is $943.
A couple who is eligible for SSI together can get up to $1,415 each month. A $472 amount is also available for people who are considered “essential persons,” or people who help the household in ways that are needed.
With the 2.5% COLA in 2025, these SSI benefits will go up by a small amount. This means the following for people who get SSI:
- Single individuals: The maximum will rise from $943 to $967 per month.
- Couples: The maximum will increase from $1,415 to $1,450 per month.
- Essential persons: The benefit amount will go up to $484 per month, up from $472.
These incremental increases, while modest, will help ease the impact of inflation on the most vulnerable households. However, due to the SSI benefit caps, the total dollar increase for SSI recipients is lower than for other benefit programs.
Retirement: greater increase for middle and higher incomes
People who get retirement benefits will get an extra $50 a month on average thanks to the 2.5% COLA. In December 2024, the average retirement benefit was about $1,927. In January 2025, it will be about $1,976.
In this group, people whose monthly retirement benefits are higher will feel the effects of the COLA more. The dollar increase after the change will be bigger if the current benefit is bigger. For example, someone whose retirement benefit is $2,500 might see an increase of about $62.
Someone whose benefit is less than $2,500 will see a smaller increase. The goal of this system is to help people keep their purchasing power, but people with higher incomes tend to benefit more from it.
SSDI: disability support also benefits from the increase
The 2.5% COLA will also mean that people who get Social Security Disability Insurance (SSDI) will get more money. People who get SSDI currently get about $1,539 a month on average, but some people may be able to get up to $3,822 a month depending on their work history and level of disability.
People who get SSDI will see an average monthly increase of about $39 thanks to the 2.5% change for 2025. For people who get the most from SSDI, which is $3,822, the increase could be about $95. This is a good amount to help with the rising cost of living, especially since SSDI recipients often have special needs.
Why COLA affects different benefits in distinct ways
The different effects of COLA are mostly due to how each program is set up and how much each one can pay out. SSI is meant to provide more basic support, especially to people who don’t have any other source of income. Retirement and SSDI benefits allow for higher payments. Because of this, the SSI increases are not as big.
Also, Social Security isn’t the only program that uses the consumer price index to change benefits. A lot of other federal and state assistance programs do too, though the exact increase can be different. This method is meant to help people keep their purchasing power as prices go up, which is especially important right now because of inflation.
