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 AARP.
How to determine how big your benefit checks will be
Current beneficiaries can approximately gauge how much their benefits may change by multiplying their current monthly benefit check amount by the percentage increase, according to Joe Elsasser, a certified financial planner and president of Covisum, a Social Security claiming software company.
To calculate the size of next year’s benefit increase more precisely, it helps to factor in Medicare Part B premiums, which are often deducted directly from benefit checks. The standard Medicare Part B premium is projected to increase to $185 per month in 2025, up from $174.70 in 2024. Some beneficiaries may pay higher premium rates based on their incomes.
The bigger your Social Security benefit, the larger dollar amount increase to benefits you will see. Because benefits increase by 77% for waiting to claim retirement benefits from age 62 to age 70, the cost-of-living adjustments help show why it can be better to delay claiming benefits, according to Elsasser.
“The initial claim decision has the biggest impact on the size of your check,” Elsasser said.
The Social Security Administration plans to begin notifying beneficiaries of their new benefit amounts by mail starting in December.
This year, the agency is providing a new one-page COLA notice that will detail benefit amounts, including any deductions, and the exact dates the 2025 checks will start.
COLA statements will also be available online. However, beneficiaries will need to have a My Social Security account by Nov. 20 in order to see their notices.
Correction: In recent years, COLAs have been larger in response to high inflation. An earlier version misstated the level of inflation.
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