Social Security beneficiaries will see a 2.5% increase in their benefits starting in 2025. This cost-of-living adjustment (COLA) is the lowest since January 2021, which saw a 1.3% adjustment. The average recipient will see an increase of about $50 per month.

Social Security's cost-of-living adjustment (COLA) isn't the only notable change to America's top retirement program in 2025.

Last week, the U.S. House of Representatives overwhelmingly passed the Social Security Fairness Act, a bipartisan piece of legislation that would increase benefits for roughly 2.5 million Americans who are currently penalized for their pensions.

A 2.5% cost-of-living adjustment, Medicare Part B premiums and tax liabilities are key changes to watch for that affect 2025 Social Security benefits.

The first piece of good news is that beneficiaries will see a 2.5% bump in benefits beginning in January, thanks to the cost-of-living adjustment (COLA). The average retiree collects just over $1,900 per month in benefits, which amounts to a raise of roughly $50 per month.

The House is expected to try to pass a Social Security-related bill this week to ensure benefits for workers who are also eligible for other pensions, despite a surprise move by hard-right Freedom Caucus leaders to derail the effort.

An important aspect of Social Security benefits is the monthly payouts increase they receive in most years to (somewhat) keep up with inflation. This is called the Social Security cost-of-living adjustment (COLA).

The reason Social Security benefits are eligible for an automatic cost-of-living adjustment (COLA) each year is that without an inflation-based boost, seniors would be guaranteed to lose buying power from one year to the next.