The annual increase in Social Security benefits due to the Cost of Living Adjustment (COLA) is one of the most evident ways that most recipients see the program’s ongoing evolution to keep up with the times.

Since the COLA is tied to inflation and inflation does not always climb, a raise is obviously not guaranteed, but it happens often enough that the majority of recipients have grown accustomed to receiving higher benefits.

This guarantees that their benefits maintain their purchasing power over time and enables them to keep up with inflation. The COLA will be 2.5% in 2025, which is a substantial drop from the average adjustment of 3.2% in 2024.

Although it is impossible to assess whether this benefit increase is adequate out of context, the increase will be roughly $50 per month, considering that the average Social Security check is just over $1,900 per month.

The extra money might not be enough to cover all of the seniors’ demands, especially since the cost of living has increased dramatically in recent years and Medicare Part B premiums will increase by around $10 a month.

Contrary to popular assumption, benefits are meant to help retirees maintain their standard of living rather than increase it. Additionally, the increase isn’t meant to help them become richer or save more money over time; rather, it’s meant to help them keep up with the rising costs of fuel, food, and other goods and services.

The issue seems to be that some retirees will have been in a worse situation than they were before they had to take money out of their savings to fund operating costs when inflation was greater because the rise happens after inflation has been calculated and is not retroactive.

However, the increase is final, and starting in early December, recipients will get postal notifications of their enhanced benefit prior to its implementation in January.

Other changes to the Social Security program

The taxable maximum earnings will increase from $168,600 to $176,100 in 2025. Additionally, the maximum monthly Social Security income will rise from $4,873 to $5,108. Only a small number of beneficiaries would be impacted, but the 2.5% COLA will be applied to all benefits.

Retirement benefits are not the only benefits that will rise; Supplemental Security Income, disability, and survivor and family benefits will all see increases of the same magnitude. Supplemental Security Income recipients should be informed that, in order to accommodate the New Year’s holiday, their first benefit for 2025 will be paid early, on December 31st.

The increase will have been applied to the check, and the new amount will be put into your bank account even if the payment will technically arrive in 2024.

The earnings test limit, which is applicable to employees who simultaneously receive Social Security benefits, will undergo the last major modification. Employees who have not yet attained full retirement age and those who will do so in 2025 are subject to two limitations.