Social Security recipients in 2025 will see an increase of more than $960

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 at which they can claim benefits, or 2) we complain about the portion of the money that is our (bi)weekly paychecks are deducted. With the presidential election approaching, the topic of Social Security and Supplemental Security Income (SSI) is being brought up more and more frequently. Specifically, Millennials and Generation Z are being told that only 75% of benefits will be covered by 2035, and younger voters want to know how either candidate plans to solve this problem. For those who already receive these benefits, a new discussion is on the table: increasing the social security contribution by 2025.

SSI benefits for more than 72.5 million Americans will increase by 2.5% next year. The cost of living increase (COLA) covers benefits payable to nearly 68 million SSI beneficiaries in January 2025. Additionally, increased payments to nearly 7.5 million SSI recipients will begin on December 31, 2024.

Who receives social benefits?

SSI benefits don’t just benefit seniors. People with disabilities may also be eligible for these funds, and these funds are calculated using “work credits.” Employees receive four work credits per year based on their annual earnings. As the general wage level increases, the income from a work credit also increases.

This year, workers received an SSI and Medicare credit for each $1,730 of covered earnings. To receive all four work credits in the same year, they would need to earn $6,920 by the end of the year. It is entirely possible that this will be based on that person’s total annual wages with a traditional employer or based on self-employment income. But here too, this amount can change if the general wage level increases.

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

If the same investor were between the ages of 24 and 31, the recipient would have to have worked half the time between age 21 and the time the disability began.

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

Dependents, surviving spouses, and dependent children may also be eligible to receive these SSI benefits for various reasons. However, you must be a U.S. citizen or a legally present non-citizen.

Why is the Social Security COLA increase happening in 2025?

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

This is not the first time such a surge has occurred. The first COLA in June 1975 was based on the increase in the Consumer Price Index for Urban Wage Earners and Office Workers (CPI-W). After 1983, COLAs were 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, payment increase notices should be received in the mail in early December. The simplified COLA notice will be one page, use “plain and personalized language,” and will clarify the exact dates and dollar amounts of a person’s new benefit amount, plus any deductions.