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After months of speculation, the Social Security Administration has finally announced the cost-of-living adjustment (COLA) for 2025. It’ll add this COLA to your checks beginning with your December 2024 benefit, which you receive in January 2025.
The COLA is the smallest we’ve seen since 2021. Many expected this now that inflation has begun to cool, but it’s still disappointing to those who have been struggling to make ends meet with their Social Security checks for a while.
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That said, COLAs are percentages, not a flat dollar value. Everyone will see their Social Security checks increase by different amounts. Calculating your own COLA increase isn’t too hard, but if you want a quick ballpark of what you’ll get next year, looking at averages can help.
Social Security beneficiaries will get 2.5% more next year
The 2025 Social Security COLA came in at 2.5%. This is right on target with last month’s estimates from The Senior Citizens League (TSCL), a nonpartisan senior group.
It represents the smallest COLA since the 1.3% increase beneficiaries got in 2021. However, it’s pretty close to the 20-year average of 2.6%. Here’s a closer look at the difference it’ll make to beneficiaries’ average checks next year:
|
Beneficiary Type |
Average Benefit (as of Aug. 2024) |
Estimated Average Benefit After COLA |
Average Monthly Benefit Increase |
|---|---|---|---|
|
Retired Worker |
$1,920 | $1,968 | $48 |
|
Spouse of Retired Worker |
$910 | $933 | $23 |
|
Child of Retired Worker |
$893 | $915 | $22 |
|
Child of Deceased Worker |
$1,104 | $1,132 | $28 |
|
Widowed Parent |
$1,286 | $1,318 | $32 |
|
Nondisabled Widow(er) |
$1,785 | $1,830 | $45 |
|
Disabled Widow(er) |
$928 | $951 | $23 |
|
Parent of Deceased Worker |
$1,620 | $1,661 | $41 |
|
Disabled Worker |
$1,540 | $1,579 | $39 |
|
Spouse of Disabled Worker |
$422 | $433 | $11 |
|
Child of Disabled Worker |
$492 | $504 | $12 |
Data source: Social Security Administration. All benefit amounts have been rounded to the nearest dollar.
Keep in mind that these are only averages. If your current checks are larger than the 2024 benefit shown in the table above, you will receive a larger average increase.
The actual formula for calculating your 2025 Social Security amount is a bit complex, but you can get a pretty good approximation of your benefit next year by adding 2.5% to your current checks. You might be off by a dollar or two, but it should be pretty accurate.
The Social Security Administration will send you a personalized COLA notice with your exact 2025 benefit amount by mail in December. You may also be able to access this notice in early December through your my Social Security account, if you have one.
What to do now
Now that you have a rough idea of what your 2025 Social Security checks will look like, you can begin to plan your budget for next year. But before you do that, you may want to consider whether you’ll owe Social Security benefit taxes next year as well.
This is a federal tax that Social Security beneficiaries pay if their provisional income — adjusted gross income (AGI), plus any nontaxable interest on their investments and half their annual Social Security benefit — exceeds $25,000 for a single adult or $32,000 for a married couple. It can force you to pay ordinary income tax on up to 85% of your Social Security checks.
Donald Trump wants to end this tax, but there’s no guarantee this would happen even if he were elected in November. It’s better to plan to owe these taxes if you think your provisional income will be high enough. You can earmark the funds for taxes yourself and pay them at the end of the year if need be. Or you can fill out Form W-4V and request that the IRS withhold a portion of each of your checks for taxes upfront. Any excess money withheld throughout the year would come back to you as a tax refund when you submit your return.
Keep in mind that nine states still tax the Social Security benefits of some seniors as well. If you live in one of these, you may also want to check whether the bump you’ll get from the 2025 COLA could affect your likelihood of owing these taxes. If so, factor these expenses into your 2025 budget, so you aren’t caught off guard at tax time.
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