Social Security Cost-of-Living Adjustment for 2025

If you’re getting Social Security payments—or if you will be soon—there’s good news. Monthly checks will increase by 2.5 percent next year. The boost is the result of the annual Cost of Living Adjustment (COLA) from the Social Security Administration (SSA). This year’s adjustment is in line with the average increase of 2.6 percent retirees have received over the past decade; however, it is down from last year’s 3.2 percent rise.

After three years of above-average increases beginning in 2021, the increase for 2025 may seem a little low. But there is a silver lining driving the latest increase—lower inflation. The cost-of-living adjustments are made to preserve the spending power of benefits. Each year the SSA calculates the size of the annual adjustment at the end of September based on the 12-month change in the Consumer Price Index. So, while the adjustment isn’t as large as in some recent years, the good news is that prices of many of the things you buy regularly shouldn’t be rising as fast as they were a couple of years ago. Here’s a look at how much retirees’ average monthly checks will go up in 2025—and other adjustments to the program.

What to expect if you’ve already claimed Social Security

More than 72.5 million people receive monthly benefit checks from the Social Security Administration, according to the latest government estimates. Of those, about 65 million are Social Security recipients, and another 7.4 million receive Supplemental Security Income. Some receive both forms of payments.

The average monthly payment in 2024 is about $1,927 per month, according to the latest information from the Social Security Administration. For 2025, that figure is expected to grow by nearly $50 each month to $1,976. The increase amounts to $588 in additional benefits for the average recipient in 2025 compared to this year.

The maximum Social Security benefit for a worker retiring at full retirement age is increasing to $4,018 per month in 2025, up from $3,822 per month in 2023.

Changes if you’re still in the workforce

There’s also a change that affects those of us still in the workforce. When you’re in the workforce, you pay 6.2 percent in Social Security tax; your employer also kicks in about 6.2 percent. Self-employed workers pay the full 12.4 percent. However, the taxes apply to only to a certain amount of income. For 2025, the maximum amount of pay that’s subject to Social Security tax will increase by 4.5 percent to $176,100, up from $168,600 for 2024.

Things to consider when claiming your Social Security

While you can start claiming Social Security benefits beginning at age 62, you must be at your full retirement age (FRA) (between 66 and 67, depending on when you were born) to receive 100 percent of your benefit. Additionally, for every year that you delay receiving these funds after your FRA up to age 70, you’ll receive an 8 percent bump in your monthly benefit, which will remain in place for the rest of your life.

Of course, deciding when you file for Social Security benefits isn’t solely a financial decision and varies for everyone. Whether it’s health issues or a late-career job loss, you may find yourself needing to retire before turning 67. Or maybe you want to travel when you’re relatively young and healthy and expect your financial needs to be more modest in your later retirement years. On the other hand, maybe you love your work and don’t have any plan to retire. Or if you’ve already started receiving benefits but find that you can cover expenses by other means, you also have the option to suspend Social Security until age 70. These are all important considerations when it comes to deciding when to claim your Social Security benefit.

Social Security is one part of a larger financial plan

Social Security is typically a critical base of income for retirees because it’s guaranteed for life and unaffected by swings in the market. But for most people, it’s just one part of a larger plan that’s designed to help you create reliable income while protecting against many known risks, including inflation. The guaranteed, stable payments from Social Security tend to pair well with other financial tools like investments, which can help you grow your wealth over time—but can be volatile in the short term.

Additional tools working alongside Social Security, such as income annuities, reduce volatility in a financial plan and can help protect you from running out of money in retirement should you live longer than you expect. Additionally, whole life insurance can help protect your financial plan against volatility while preserving your legacy. Your cash value is essentially another cash reserve (that’s unaffected by market swings and likely to grow more than money sitting in a checking account) because you can access it at any time.[i] In addition, the death benefit will allow you to be more deliberate about your legacy.

And you don’t have to figure out on your own how all the pieces fit together. Your Northwestern Mutual advisor can help you design a plan that addresses potential blind spots and take advantage of opportunities to get the most out of your money during retirement.

[i] The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.