Social Security deductions are one of those topics that only really come into play when two things happen: 1) our loved ones reach retirement age where they can file for benefits, or 2) we grumble about the chunk of money coming out of our social security is achieved. (bi)weekly pay slips. With a presidential election underway, the topic of Social Security and Supplemental Security Income (SSI) has come up more often than not. More specifically, Millennials and Gen Zers are being told that only 75% of benefits will be covered by 2035, and younger voters want to know how both candidates plan to solve this. For those already receiving these benefits, a new discussion is on the table: the 2025 Social Security COLA increase.

SSI benefits for more than 72.5 million Americans will increase 2.5% next year. The cost of living increase (COLA) will cover 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 Security Benefits?

SSI benefits don’t just go to seniors. People with disabilities may also qualify for these funds, and those funds are calculated on a “work credit” basis. Employees earn four work points per year, based on their annual income. As the general wage level increases, the income for a work credit also increases.

This year, workers earned one SSI and Medicare credit for every $1,730 in covered income. To get all four work credits in the same year, they would have to earn $6,920 by the end of the year. It is entirely possible that this is done based on this person’s annual total wages with a traditional employer or based on self-employment income. But again, as overall wages rise, this amount could change.

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

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

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

Family members, surviving spouses, and dependent children may also qualify for this SSI earner’s money for a variety of reasons. However, they must be a U.S. citizen or lawfully present noncitizen.

Why is the Social Security COLA increase happening in 2025?

COLA is the reason behind this new SSI payment increase. While an eligible person may have received $11,321.49 this year, the same person will receive a $967 higher payment next year totaling $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, which will total $17,404.87.

It is not the first time that such an increase has occurred. The first COLA, in June 1975, was based on the increase in the consumer price index for urban wage earners and white-collar workers (CPI-W). After 1983, COLAs are 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 became effective.

For current SSI recipients, payment increase notices should arrive in the mail in early December. The simplified COLA notice will be one page, in “simple and personalized language,” and clarify the exact dates and dollar amounts of a person’s new benefit amount plus any deductions.