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.
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.
Social Security Commissioner Martin O’Malley told The Associated Press that the upcoming increase will provide a measure of relief for recipients as inflation has cooled and the agency serves a record number of retirees while funding is at a historic low.
His message to those who feel that the adjustment is not enough: “They’re not wrong.”
”I’ve heard the stories and it is a struggle for seniors," he said, adding that "in their older years, they have to spend their money on a different array of costs and expenses, including prescription drugs.”
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.