As a new year approaches, beneficiaries of Social Security and Social Security disability (SSD) will see some changes to their benefits. However, there’s no need to panic — this is a yearly occurrence that takes several factors into account. Read on to discover the meaning of cost-of-living adjustments for 2025, how they’re determined and what that means for eligible Social Security recipients.

Overview: Social Security Disability and Cost-of-Living Adjustments

It’s important to understand the basics of these ideas and programs when it comes to applying or receiving the payouts:

SSD

Social security disability (SSD) is a form of payment distributed to disabled persons that are unable to work at a normal capacity. This is different from supplemental security income (SSI) that doesn’t take work history into account.

COLA

Those Social Security benefits are determined by the cost-of-living adjustment (COLA) that occurs each year. To adjust for inflation, the amount paid out to eligible recipients changes by a small percentage year over year. These adjustments are applied by looking at the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the previous year’s Q3.

A History of Social Security Benefits

 As the economy shifts each year, an increase is dependent on the year prior. The trends stretch as far back as 1975, when amendments were first introduced by the national Social Security Administration.

For example, both employed and self-employed beneficiaries earned an 8.7% increase for the year 2023. This compares to a 5.9% increase in 2022. Trends for the previous year saw a slight decline in adjustment, with a 3.2% adjustment in 2024.

When the CPI-W takes rising payments into account, the factors involved include various industries and fees. Wages for workers, retirement costs, student exemptions and medical expenses are all considered when creating the percentage adjustment.

Cost-of-Living Adjustments for 2025

The amount for Social Security allowances is already determined for 2025. Beneficiaries will receive a 2.5% COLA starting with wages in December 2024, where payments will start in January 2025.

Fluctuation across commercial goods, services and other areas of consumer intake is determined by the consumer price indexes from the Bureau of Labor Statistics (BLS) to create this number.

Is COLA a Good Thing?

In a society of turbulent pricing and economic shifts, COLAs keep Social Security payments consistent for its recipients. Each beneficiary experiences different limitations, from medical issues to location-dependent physical ones. COLAs guarantee that payments remain consistent through rising housing prices, potential medical expenses, transportation costs, and other potential areas of spending. In essence, Social Security maintains the quality of life for a populace that has already achieved significant work histories, or might need extra assistance.

Contact Shook & Stone Social Security Lawyers for any Cost-of-Living Adjustment Questions

Of course, there are exceptions to the positive outcomes of COLA. Some recipients may not receive an adequate amount of Social Security disability benefits to cover cost of living in their area, or they may require medical needs that supersede the monthly payments.

Eligibility for SSDI is contingent upon many factors, and the application process can get confusing. Shook & Stone is equipped with a team of knowledgeable experts across the state of Nevada that can help Social Security disability beneficiaries get the information — and potential benefits — that they need.

Fill out this online application for a free consultation, or call us at 702-978-7408.