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WASHINGTON (AP) — Millions of Social Security recipients will get a 2.5% cost-of-living increase to their monthly checks beginning in January, the Social Security Administration announced Thursday.
The cost-of-living adjustment, or COLA, for retirees translates to an average increase of more than $50 for retirees every month, agency officials said.
About 72.5 million people, including retirees, disabled people and children, get Social Security benefit.
Commissioner Martin O’Malley said the adjustment will help “tens of millions of people keep up with expenses even as inflation has started to cool.”
But even before the announcement, retirees voiced concern that the increase would not be enough to counter rising costs.
Sherri Myers, an 82-year-old retiree from Pensacola City, Florida, is now hoping to get an hourly job at Walmart to help make ends meet.
“I would like to eat good but I can’t. When I’m at the grocery store, I just walk past the vegetables because they are too expensive. I have to be very selective about what I eat — even McDonald’s is expensive,” she said.
Recipients received a 3.2% increase in their benefits in 2024, after a historically large 8.7% benefit increase in 2023, brought on by record 40-year-high inflation.
The smaller increase for 2025 reflects moderating inflation.
The agency will begin notifying recipients about their new benefit amount by mail starting in early December. Adjusted payments to nearly 7.5 million people receiving Supplemental Security Income will begin on December 31.
The program is financed by payroll taxes collected from workers and their employers and that is slated to increase to $176,100. The maximum amount of earnings subject to Social Security payroll taxes was $168,600 for 2024, up from $160,200 in 2023.
The announcement comes as the national social insurance plan faces a severe financial shortfall in the coming years.
The annual Social Security and Medicare trustees report released in May said the program’s trust fund will be unable to pay full benefits beginning in 2035. If the trust fund is depleted, the government will be able to pay only 83% of scheduled benefits, the report said.
AARP CEO Jo Ann Jenkins said in a statement that “there is more we must do to ensure older Americans can continue to count on Social Security. AARP continues to call on Congress to take bipartisan action to strengthen Social Security and secure a long-term solution that Americans can rely on.”
The presidential candidates, Democrat Kamala Harris and Republican Donald Trump, have presented dueling plans on how they would strengthen Social Security.
AARP conducted interviews with both Harris and Trump in late August and asked how the candidates would protect the Social Security Trust Fund.
Harris said she would make up for the shortfall by “making billionaires and big corporations pay their fair share in taxes and use that money to protect and strengthen Social Security for the long haul.”
Trump said “we’ll protect it with growth. I don’t want to do anything having to do with increasing age. I won’t do that. As you know, I was there for four years and never even thought about doing it. I’m going to do nothing to Social Security.”
Fatima Hussein, The Associated Press