Yes, Social Security benefits saw an increase in 2025
The Social Security Administration (SSA) officially announced a 2.5% cost-of-living adjustment (COLA) for 2025, with payments reflecting the increase starting in January. This adjustment applied to more than 72.5 million Americans receiving Social Security and Supplemental Security Income (SSI) benefits. This 2.5% increase was lower than the 3.2% increase in 2024 and the higher adjustments in 2023 (8.7%) and 2022 (5.9%).
The disconnect between the COLA and senior costs
Many seniors on a fixed income felt the 2.5% COLA was not enough. Senior advocacy groups and experts noted a gap between the official inflation measure used for the COLA and the actual expenses retirees face. Costs for healthcare, housing, and certain groceries continued to rise faster than the 2.5% increase. This has reduced seniors' purchasing power.
The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Critics argue this index doesn't accurately reflect retirees' spending, who spend more on healthcare and housing than working-age people. Many propose using the Consumer Price Index for the Elderly (CPI-E) instead.
Comparison of Recent COLA Increases
Recent COLA amounts have varied. This table compares the 2025 COLA with the previous two years:
| Year | COLA Percentage | Average Monthly Retiree Benefit (before COLA) | Estimated Average Monthly Increase | Key Context |
|---|---|---|---|---|
| 2025 | 2.5% | $1,927 (2024) | $49 | Reflected cooling inflation after record highs. |
| 2024 | 3.2% | $1,848 (2023) | $59 | Followed historically high inflation years. |
| 2023 | 8.7% | $1,681 (2022) | $146 | The largest COLA increase in decades due to surging inflation. |
The double impact of Medicare Part B premiums
For many seniors, the 2025 COLA increase was partly or fully offset by higher Medicare Part B premiums. Premiums are often deducted from Social Security checks, so an increase reduces the net COLA gain.
- Higher Part B premium: The standard monthly premium for Medicare Part B rose from $174.70 in 2024 to $185 in 2025. This $10.30 increase reduced the average $49 COLA increase.
- Income-related premium adjustments (IRMAA): Higher-income beneficiaries saw even larger reductions due to IRMAA.
What to expect in 2026
Experts predict a slightly higher COLA for 2026, estimated between 2.7% and 2.8%. The official 2026 COLA will be announced in October 2025. However, the projected modest increase continues to support calls for a COLA calculation method that better reflects senior expenses. Also, the full retirement age (FRA) will be 67 starting in 2026 for those born in 1960 or later.
Conclusion: The reality of the 2025 COLA
Seniors received a 2.5% COLA increase in 2025, the lowest since 2021. This modest increase was largely impacted by rising costs, particularly healthcare and groceries, and higher Medicare Part B premiums. This highlights the ongoing challenge for seniors on fixed incomes, leading to continued calls for changing the COLA calculation method to better reflect retirees' actual expenses. For more information, visit the official Social Security Administration website.
