For more than 70 million Americans, the 2025 cost-of-living adjustment (COLA) is more than just a percentage — it can meaningfully affect monthly budgets. A 3.2% increase raises the average retired worker’s benefit to roughly $1,790 per month, with disability, survivors’, and Supplemental Security Income (SSI) payments also seeing modest increases. Updated payments begin in January 2025, and the Social Security Administration (SSA) mails personalized notices in December outlining each recipient’s new amount.

While any increase is welcome, many retirees feel the impact of rising costs in healthcare, housing, and groceries more sharply than the adjustment can offset. The COLA is designed to help benefits keep pace with inflation, but it may not fully cover the real-world price pressures many households face.

As a result, staying informed has become increasingly important. Reviewing your updated benefit amount, understanding how inflation affects purchasing power, and keeping track of federal and state tax rules are all key parts of modern retirement planning.

For beneficiaries, the annual COLA announcement is both reassurance and reminder — reassurance that benefits are adjusting, and a reminder that financial planning remains essential in a changing economic environment.