Social Security Administration announces 2.5% cost-of-living adjustment for 2025

More than 72.5 million Americans will see a 2.5% cost-of-living adjustment to benefit payments in 2025, the Social Security Administration announced on Thursday.

With the change, Social Security retirement benefits will increase by about $50 per month on average starting in January, according to the agency.

The Social Security Administration first announced the change on Thursday morning via its press office feed on X and confirmed the news to CNBC by phone.

The Social Security cost-of-living adjustment for 2025 is the lowest annual increase since 2021, when beneficiaries saw a 1.3% increase to benefits. In recent years, COLAs have been larger in response to record high inflation.

While the cost-of-living adjustment for 2024 was 3.2%, beneficiaries saw the highest increases in four decades in 2023, with an 8.7% increase, and in 2022, with a 5.9% boost to benefits.

Now that the pace of inflation has come down, the cost-of-living adjustments are more average. Social Security’s annual benefit increases have averaged about 2.6% over the past 20 years, according to the Senior Citizens League, a nonpartisan senior group.

“The COLA is a vital component of Social Security, ensuring older Americans have an inflation protected source of income in retirement,” AARP CEO Jo Ann Jenkins said in a statement. “This adjustment means older Americans will receive needed relief to help better afford essential items from groceries to gas.”

Even with this adjustment, many older Americans may find it hard to pay their bills amid persistent higher prices, she said. For about 40% of older Americans, Social Security is their primary source of income, according to the AARP.

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