On Thursday, the Social Security Administration (SSA) in the United States announced that in 2025, the income of Social Security beneficiaries will increase by 2.5%. This marks the smallest annual cost-of-living adjustment since 2021.
In a statement released on Thursday, the SSA stated that in 2025, both Social Security Benefits and Supplemental Security Income (SSI) will see a 2.5% increase from the current levels, affecting over 72.5 million Americans.
According to the agency’s data, starting from January next year, the average monthly Social Security retirement benefit for retired workers is expected to increase by around $50, reaching approximately $1,976.
In 2025, approximately 68 million people will receive Social Security benefits, while an additional 7.5 million people will receive Supplemental Security Income. SSI is a program designed for disabled individuals and low-income elderly Americans, with benefit amounts set to increase starting from December 31.
The SSA noted that some individuals receive both of these income sources simultaneously.
The cost-of-living adjustment for Social Security in 2025 is the smallest annual increase since 2021. In recent years, adjustments have been relatively significant to counter record-high inflation rates, with adjustments of 3.2% in 2024, 8.7% in 2023, and 5.9% in 2022. The 2023 increase was the largest in 40 years.
The decrease in the adjustment size is attributed to a significant drop in inflation rates. The U.S. government adjusts Social Security payments annually to help ensure that the growth of Social Security income keeps pace with inflation.
However, despite a sharp decline in inflation rates since reaching a 40-year peak in June 2022, some elderly advocacy groups argue that the adjustment in cost-of-living does not adequately meet the financial needs of seniors. This is because the CPI-W index used by the SSA to measure inflation tracks workers’ expenses and does not accurately reflect the higher healthcare costs incurred by retirees, which have eroded the purchasing power of the elderly.
Bill Sweeney, Senior Vice President for Government Affairs at the AARP, stated, “Many seniors would say that this adjustment is not enough to keep up with rising prices.”
Jo Ann Jenkins, CEO of the AARP, also mentioned that even with the adjustment in Social Security benefits, many seniors might still struggle to pay bills due to the persistently high cost of living.
According to the AARP’s data, Social Security benefits serve as the primary income source for approximately 40% of elderly Americans.
Data from The Senior Citizens League, a non-partisan non-profit organization in the U.S., shows that over the past 20 years, Social Security benefits have had an average annual increase of about 2.6%.