Next year, Social Security recipients will see a 2.5 percent raise in benefits, reflecting the most recent cost-of-living adjustment (COLA).
For Social Security Disability Insurance (SSDI) recipients, the average monthly benefit will increase from $1,543 to $1,581, not including individuals who are blind, for whom the monthly rate is significantly higher. For Supplemental Security Income (SSI) beneficiaries, the average monthly benefit will rise from $943 to $967 for individuals and from $1,415 to $1,450 for couples.
In New Jersey, the actual benefit amount can vary depending on factors like income, living arrangements, and other financial resources. The state also provides a supplement to eligible SSI recipients, which increases their total monthly benefits beyond the federal maximum.
If you’re unsure how Social Security benefits like SSDI and SSI may impact your finances or eligibility and how the 2025 adjustments could affect you, a New Jersey special needs trust attorney can help clarify your options and provide the guidance you need. At The Matus Law Group, our team can explain how these adjustments work, including how state supplements in New Jersey may affect your total benefits. Additionally, if you’re wondering whether your disabled child qualifies for Social Security benefits, we can help you understand the eligibility criteria and guide you through the application process. Contact us today at (732) 281-0060 to schedule a consultation.
How the Social Security Administration (SSA) Calculates the Annual Cost of Living Adjustment (COLA)
The answer is a seemingly arbitrary measure of inflation, long criticized by advocates for the elderly and people with disabilities as unrepresentative of the spending patterns of Social Security beneficiaries.
Each month, the Bureau of Labor Statistics (BLS) publishes a variety of different measures of inflation, each of which is tailored to reflect the impact of price changes on different population groups.
The Social Security Administration (SSA) calculates its annual cost-of-living adjustment (COLA) based on a measure of inflation known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Adopted by the SSA in 1975, the CPI-W attempts to measure inflation based on the spending patterns of urban households where at least half of the income comes from clerical or wage occupations, with one of the earners having been employed for at least 37 weeks in the previous 12 months.
According to the BLS, only about 28 percent of the total U.S. population falls into households that meet this criteria. Despite having very few of these households contain individuals receiving Social Security benefits, the CPI-W remains the SSA’s chosen measure of inflation. This choice has been criticized as it may not adequately reflect the spending patterns of SSI and SSDI beneficiaries, who often face different economic pressures, such as higher medical costs.
The debate over the adequacy of the CPI-W has led to calls for alternatives like the CPI-E for the elderly, which typically records higher inflation due to increased healthcare costs. This index may better reflect the economic realities of SSI and SSDI beneficiaries. Another alternative is the chained CPI, which accounts for consumer substitutions and generally measures inflation 0.25 to 0.35 percent lower than the CPI-W. However, the CPI-E remains experimental, and the SSA continues to use the CPI-W for COLA calculations.
The 2025 cost-of-living adjustment (COLA) is set at 2.5 percent, reflecting shifts in the prices of essential goods and services over the past year. This increase is vital for Social Security beneficiaries, as it helps offset the impact of inflation and supports their ability to maintain purchasing power in a changing economy.
For more on how the SSA calculates COLAs, click here.
| Aspect | Details | Key Considerations |
|---|---|---|
| Inflation Measure Used | The SSA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). | Reflects spending patterns of urban households with wage or clerical occupations. |
| Population Coverage | Only 28% of U.S. households meet the CPI-W criteria. | Few of these households include Social Security beneficiaries, leading to criticisms. |
| Alternative Inflation Index | The BLS has created an experimental index for the elderly to reflect higher medical costs. | Advocates argue this index better represents the spending patterns of SSI and SSDI beneficiaries. |
| Legislative Trends | Recent proposals aim to adopt stricter inflation measures rather than improve current metrics. | Raises concerns about further misalignment with beneficiaries’ economic realities. |
