People who get Social Security Disability Insurance (SSDI) are eagerly waiting for the 2025 cost-of-living adjustment (COLA) news because it will determine how much their monthly payments will go up next year.
Understanding the COLA Adjustment
The COLA is an important change that happens every year and is meant to help all Social Security recipients deal with inflation by adjusting their earnings.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used by the Social Security Administration (SSA) to figure out the COLA.
This index tracks changes in the prices of everyday items and services, like food, energy, and transportation. The SSA wants to make sure that Social Security payments keep up with inflation by keeping an eye on these changes.
When the SSA figures out the COLA, they use inflation numbers from the third quarter of each year, which runs from July to September.
To find out how much the cost of living has changed, they compare the CPI-W numbers from this time period to the same time last year. Then, this study tells us how much benefit payments will go up next year.
Next week is when the official release of the 2025 COLA is due, but experts have already made some guesses based on recent trends.
Predictions for the 2025 COLA
The COLA has changed a lot in the past few years because of the effects of the COVID-19 outbreak and changes in the economy. One example is that Social Security users got a big 8.7% raise in 2023, but only a 3.2% raise in 2024.
There will likely be an even smaller COLA in 2025, with a rise of only 2.5%, according to experts. The expected drop is because the inflation rate has been going down over the past few months, which has helped ease the pressure on prices for consumers.
If the SSA approves a 2.5% COLA increase, people who get SSDI can expect their monthly payments to go up too. In 2024, for example, the average SSDI salary each month is $1,711.40.
With a 2.5% raise, this would add about $42 to the monthly payment, making the new average amount about $1,753.
This increase may not seem like a big deal compared to some of the bigger changes in the last few years, but it is still a big deal because it helps beneficiaries keep their spending power even though prices are going up.
Even a small rise can help with basic costs, making sure that people on SSDI can keep paying for things they need every day. This is especially important since their benefit is based on their work history and not how bad their condition is.
Why the COLA Matters to SSDI recipients
SSDI has different requirements for who can get it than private insurance or other government services. While workers’ compensation and veterans’ payments do help people who are temporarily or partially disabled, Social Security does not.
In order to get SSDI, a person must meet the precise criteria for disability set out by the Social Security Act.
According to the Act, someone is disabled if they can not work because of a serious medical problem that has lasted or is expected to last for at least one year or is likely to kill them.
Not only must the condition keep the person from doing the work they used to do, it must also make it hard for them to adapt to any other kind of work.
Because the Act has a very strict definition of disability, people who get SSDI payments are usually some of the most severely disabled people in the country.
There is evidence that people getting these benefits are over three times more likely to die within a year than other people the same age.
To be more specific, about one in six men and one in eight women who start getting benefits at age 55 die within five years of the start of their illnesses.
This is why it is important to make sure that the benefits they get are enough to take care of them when they need it. A good COLA can mean the difference between getting their needs met and not getting enough care.
