Retirement in the United States is always a challenge and a goal for all workers who, after many years of working, have finally reached the age of eligibility for retirement.In this sense, the Social Security Administration (SSA) has confirmed that retirement and disability beneficiaries will receive a 2.5% increase in their monthly payments starting in 2025. The adjustment responds to the annual increase in the Cost of Living (COLA), which is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) of the Department of Labor.
Thus, the schedule of payments established for January 2025 details that beneficiaries who get Supplemental Security Income (SSI) will get their first payment with the adjustment on December 31, 2024. This advance is due to the fact that January 1 is a holiday, and the SSA only processes payments on business days.For its part, the 2.5% adjustment is lower compared to increases applied in recent years. In 2023, the COLA reached 8.7%, the highest figure in four decades, due to more pronounced inflation. The downward trend in recent months has resulted in a more moderate adjustment for 2025, according to data from the Bureau of Labor Statistics .
Social Security payment schedule
According to the United States Social Security Administration, people who started receiving benefits before May 1997 will get their payment on January 3rd, 2025.For those whose benefits were approved later, payment dates are organized as follows: the second Wednesday of the month, corresponding to January 8, for beneficiaries born between the 1st and the 10th; the third Wednesday, January 15, for those born between the 11th and the 20th; and the fourth Wednesday, January 22, for those born between the 21st and the 31st.
In this way, it is also hoped that the COLA will not only affect monthly payments, but also other aspects of Social Security, such as income limits subject to tax. In 2025, the income limit for workers of full retirement age will increase from USD 21,240 to USD 21,935.However, above this figure, the SSA withholds $1 for every $2 of additional income, so that once the full retirement age is reached, there is no penalty for earned income.
Increase in the average retirement benefit
According to information provided by the Social Security Administration, the average benefit for retirees will increase from USD 1,907 to approximately USD 1,954 per month as of January 2025. People receiving Social Security Disability Insurance (SSDI) will also see a proportional increase in these amounts. The SSA, for its part, indicates that the maximum benefit income for a retired worker at full retirement age will increase from USD 4,873 to USD 5,180 per month.
In this way, beneficiaries will get detailed notifications about their new benefit amounts by post and electronically through their personal accounts on the “my Social Security” platform. The SSA’s Department of Labor has emphasized that the annual adjustments to Social Security are essential to reflect changes in the cost of living, based on objective data from the CPI-W. The BLS calculates the CPI-W by measuring changes in the price of essential goods and services, which guarantees that beneficiaries maintain their purchasing power in the face of economic fluctuations; in other words, that the purchasing power of pensioners is not altered by price increases and rising prices.
These adjustments, known as the Cost-of-Living Adjustment (COLA), are crucial in ensuring that Social Security payments keep pace with inflation. The COLA is calculated using third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which means that any economic downturn or surge in inflation directly influences benefit increases. Additionally, experts suggest that these adjustments not only help retirees but also stimulate the economy, as Social Security payments represent a significant source of income for millions of Americans. The SSA continues to encourage beneficiaries to review their updated benefits and plan accordingly to ensure financial stability in retirement.
