$960+ increase coming for 2025 Social Security recipients

Social Security deductions are one of those topics that don’t really come up until two things happen: 1) our loved ones reach the retirement age where they can apply for benefits, or 2) we complain about the portion of money being taken out of our (two) weekly payslips. With one presidential election happening now, the topic of Social Security and Supplemental Security Income (SSI) has come up more often than not. Specifically, Millennials and Gen Zers are being told that only 75% of benefits will be covered in 2035, and younger voters want to know how both candidates plan to address this. For those already receiving these benefits, there is a new discussion on the table: the 2025 Social Security COLA increase.

SSI benefits for more than 72.5 million Americans will increase by 2.5% next year. The increase in the cost of living adjustment (COLA) will cover benefits to be paid to nearly 68 million SSI recipients in January 2025. In addition, increased payments to nearly 7.5 million SSI recipients will begin on December 31, 2024.

Who receives social benefits?

SSI benefits don’t just go to senior citizens. People with disabilities may also qualify for these funds, and these funds are calculated by “work credits.” Workers earn four work credits per year based on their annual earnings. As the general wage level rises, so does the earnings for a work credit.

This year, workers earned one SSI and Medicare credit for every $1,730 in covered earnings. To get all four work credits in the same year, they must earn $6,920 at the end of the year. It is quite possible that this is based on that person’s total annual salary with a traditional employer or from self-employment income. But again, as the general wage level rises, this amount can change.

So what happens if that same worker ends up needing SSI earnings? Let’s say a 32-year-old real estate investor gets into a serious car accident. According to the work credit chart, this person must have earned at least 20 credits within the past 10 years to be eligible for SSI.

If this same investor was between the ages of 24 and 31, the beneficiary would have to have worked half the time between age 21 and the time the disability started.

To qualify under the age of 24, the recipient must have six work points earned during the three-year period ending when the disability began.

Family members, surviving spouses and dependent children may also qualify to receive that SSI recipient’s funds for various reasons. However, they must be a US citizen or a lawfully present non-citizen.

Why is the 2025 Social Security COLA increase happening?

COLA is the reason for this new SSI payment increase. While an eligible person may have received $11,321.49 this year, that same person will receive a $967 higher payment for a total of $11,604.53 next year. Eligible couples will also receive an increased amount; they will go from receiving $16,980.36 this year to a $1,450 increase next year, which will total $17,404.87.

It is not the first time that such an increase has occurred. The first COLA, in June 1975, was based on the increase in the Consumer Price Index for Urban Wage and Office Workers (CPI-W). After 1983, COLAs have been based on increases in the CPI-W from the third quarter of the previous year to the corresponding quarter of the current year in which the COLA took effect.

For current SSI recipients, notices of payment increases should arrive in the mail in early December. The simplified COLA notice will be on one page, in “plain and personal language,” and spell out the exact dates and dollar amounts of a person’s new benefit amount plus any deductions.