For people in the United States who depend on disability benefits, the annual Cost-of-Living Adjustment, known as COLA, plays a vital role in helping them maintain their purchasing power as living expenses continue to rise. In 2025, this adjustment will increase monthly payments, providing additional support to millions, including each disability beneficiary.
This year, the COLA has been set at 2.5%. While this increase is relatively modest compared to previous years, it offers much-needed relief in a period where inflation is impacting the prices of essential goods and services.
What COLA is and why it matters for disability benefits
The COLA is an annual adjustment made by the Social Security Administration (SSA) to ensure that social security benefits retain their real value against inflation. This adjustment is based on the Consumer Price Index (CPI), which tracks changes in the cost of a basket of essential goods and services. In simple terms, when the cost of living rises, the COLA aims to increase benefits proportionally so that beneficiaries do not lose purchasing power.
In 2025, the COLA is set at 2.5%, meaning that all social security beneficiaries, including those receiving disability payments, will see an increase in their monthly income. For disability beneficiaries, this adjustment can make a notable difference in managing their monthly finances, especially when facing rising costs.
How COLA will impact disability beneficiaries in 2025
For each disability beneficiary, the 2.5% increase translates to a boost in monthly income, which in practical terms could add over $90 a month. The exact benefit amount depends on each beneficiary’s prior income, but those who currently receive the maximum payment will see their monthly benefit rise from $3,822 to approximately $3,917 in 2025.
This increase provides disability beneficiaries with a bit more financial flexibility to handle daily expenses, many of which have been significantly impacted by inflation. Although this adjustment doesn’t completely cover the rising cost of living, it does offer some relief for essential monthly expenses.
The impact of COLA on other Social Security benefits
It’s important to remember that COLA doesn’t only affect disability benefits. Retirement benefits, survivor benefits, and Supplemental Security Income (SSI) will also see this adjustment. This means that retirees, individuals with disabilities, and other groups receiving benefits will experience a similar 2.5% increase in their monthly payments.
For example, individuals who receive SSI—a program for those with limited income—will notice an increase, although likely smaller in absolute dollar terms, due to the typically lower starting amounts compared to retirement or disability benefits. This COLA adjustment helps ensure that all social security benefits continue to provide meaningful support, especially in an economic climate where prices continue to escalate.
How to calculate the increase in disability benefits
If you’d like to estimate how much your disability benefit will increase in 2025, you can apply the 2.5% adjustment to your current monthly amount. For instance, if you currently receive $2,000 per month in 2024, this increase will add around $50, bringing your new monthly benefit to approximately $2,050 starting in January 2025. For those at the maximum benefit level, the monthly increase could reach about $95, bringing their benefit closer to the $4,000 mark.
This adjustment helps each disability beneficiary maintain a stable income level, especially in a time of ongoing increases in prices for basic goods, healthcare services, and other necessary expenses.
Why it’s essential to stay informed about Social Security adjustments
For any beneficiary, understanding annual adjustments and key dates related to Social Security is crucial for managing personal finances more effectively. The COLA increase not only impacts the monthly budget but can also be a significant factor in planning for savings and addressing unexpected expenses.
Beneficiaries can check their COLA notice on the my Social Security portal, where they will be able to see their updated benefit amounts starting in early December. Having an account on this portal simplifies the management of benefits, allowing access to tax forms, replacement cards, and updates on any pending requests.
This tool ensures that beneficiaries have immediate access to information and can manage their social security interactions efficiently, especially during periods of financial change like an increase in COLA.
