Social Security cost-of-living benefits increase announcement coming Thursday
WASHINGTON — More than 70 million Social Security recipients will learn Thursday how big of a cost-of-living increase they’ll get next year.
Before the announcement, analysts predicted the increase for 2025 would be about 2.5%, less than the increases in the previous two years. Recipients received a 3.2% increase in their benefits in 2024, after a historically large one 8.7% benefit increase in 2023, at record levels 40 years of high inflation.
The lower COLA for next year reflects moderating inflation.
About 70.6 million people participate in the Social Security program, with an average benefit of about $1,920 per month. The AARP estimates that a 2.5% COLA would increase this by $48 per month.
Ahead of the announcement, retirees expressed concern that the increase would not be enough to combat rising costs.
Sherri Myers, an 82-year-old retiree from Pensacola City, Florida, now hopes to get an hourly job at Walmart to make ends meet.
“I would like to eat well, but that is not possible. When I’m in the supermarket, 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.
Due to increased participation and reduced contributions from employees, the Social Security program will face a serious financial shortfall in the coming years.
The annual administrators of Social Security and Medicare report released in May The program’s trust fund will not be able to pay full benefits starting in 2035, according to the report. If the trust fund is depleted, the government will only be able to pay 83% of planned benefits.
The program is funded by payroll taxes collected from employees and their employers. The maximum amount of income subject to Social Security payroll taxes was $168,600 for 2024, up from $160,200 in 2023. Analysts estimate the maximum amount will rise to $174,900 by 2025.
During the presidential campaign, Vice President Kamala Harris and former President Donald Trump presented dueling plans on how they would strengthen Social Security.
Harris, the Democratic nominee, says on her campaign website that she will protect Social Security by “making millionaires and billionaires pay their fair share of taxes.”
Trump, the Republican candidate, promises that he will not cut the social program or make changes to the retirement age. Trump also promises tax cuts for older Americans, writing on Truth Social in July that “SENIORS SHOULD NOT PAY TAXES ON SOCIAL SECURITY!”
AARP conducted interviews with both Harris and Trump in late Augustand asked how the candidates would protect the Social Security Trust Fund.
Harris said she would make up the shortfall by “making billionaires and big corporations pay their fair share of taxes and using that money to protect and strengthen Social Security for the long term.”
Trump said: “We will protect it with growth. I don’t want to do anything that has to do with growing older. I won’t do that. As you know, I was there for four years and I never thought about doing it. I’m not going to do anything about social security.”