COLA 2025: Find Out How a 2.5% Boost Will Impact Your Benefits

In 2025, Social Security recipients will see a modest increase in their monthly benefits due to a 2.5% Cost-of-Living Adjustment (COLA). This annual adjustment is designed to help seniors and other beneficiaries maintain their purchasing power amid rising prices. While the increase is smaller compared to recent years, every dollar counts for those relying on Social Security. Let’s break down what this means for someone receiving $1,650 a month.

How Much Will Your Check Increase?

If your current monthly Social Security benefit is $1,650, a 2.5% COLA will add an extra $41.25 to your check each month. Starting in January 2025, your new monthly payment will be $1,691.25. Over the course of the year, this adds up to an additional $495.

How Is the COLA Calculated?

The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration (SSA) compares the CPI-W from the third quarter of one year to the same period in the previous year. If prices rise, so do Social Security benefits. For 2025, the 2.5% adjustment reflects a cooling inflation rate compared to recent years.

How Does This Compare to Past COLAs?

Here’s how the 2025 COLA stacks up to previous years:

• 2023: 8.7% (one of the largest increases in decades due to high inflation)
• 2024: 3.2%
• 2025: 2.5%

While the 2025 adjustment is smaller, it reflects a stabilization of inflation after the economic turbulence of recent years.

Don’t Forget About Medicare Premiums

One important factor to consider is Medicare Part B premiums, which are deducted from most Social Security payments. For 2025, the standard Part B premium is expected to increase to $185 per month, up from $174.70 in 2024. This $10.30 increase will slightly offset the COLA for many beneficiaries. Be sure to factor this into your monthly budget when planning your finances.

What’s Next?

The Social Security Administration will send notifications to beneficiaries in December, outlining their updated payment amounts for 2025. You can also check your updated benefit amount through your “my Social Security” account online.

While the 2.5% increase is helpful, some recipients worry that it may not fully cover rising costs, especially for essentials like groceries, housing, and healthcare. As always, it’s a good idea to review your financial plan and look for ways to stretch your benefits further.