SSDI COLA Increase 2025: How Big Could the Disability Insurance Increase Be Next Year?

TThe 2025 cost-of-living adjustment (COLA) forecast brings mixed news for Social Security Disability (SSDI) recipients. According to the Senior Citizens League The projected COLA increase for 2025 is 2.63%which provides a modest benefit increase for those who rely on SSDI. While this increase may be welcome, it is significantly lower than last year's adjustments, which could disappoint many who were hoping for a larger increase in their monthly payments.

For comparison: The COLA for 2024 was 3.2%, already a decline compared to the significant increase of 8.7% in 2023which was driven by rising inflation. The 2.63% increase projected for 2025 reflects a cooling inflation environment, which while stabilizing prices, also means smaller COLA adjustments for people on disability benefits. As the Senior Citizens League pointed out: “Disability benefit recipients may be disappointed with this year's adjustment, especially after the generous increases of recent years..”

For the average SSDI recipient, who currently receives about $1,537 per month, The 2.63% increase would mean an additional $40 per monthbringing the total to about $1,577. Over the course of the year, this adds up to an additional $480. However, the actual increase depends on the individual's benefit level. For example, someone receiving $500 a month would see their payment increase to $513, while someone with a $2,000 monthly benefit would see an increase to $2,052.

Expect a smaller increase in disability payments next year

It is important to remember that while these projections are helpful for planning, the official COLA for 2025 will not be finalized until October 2024. The Social Security Administration (SSA) bases the COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)which measures inflation. Given the current economic situation, some fluctuations in the final value are possible.

Looking back, COLA adjustments have varied considerably in the past. For example, there have been years with no increase at all, such as 2010, 2011, and 2016. In recent years, however, economic pressures have led to above-average adjustments, with a 5.9% increase in 2022 and a notable 8.7% increase in 2023.

In summary, while the SSDI COLA forecast for 2025 provides some financial relief, it is more modest compared to recent years. Recipients should prepare for a smaller increase and adjust their expectations accordingly. As always, staying informed of the final COLA announcement in October is critical for accurate financial planning in the coming year.