SSA Sets Cost-of-Living Adjustment for 2025

COLA increase set at 2.5%.

The Social Security Administration (SSA) recently announced that the Social Security and Supplemental Security Income (SSI) benefits for approximately 72.5 million Americans will increase 2.5 percent in 2025. The cost-of-living adjustment (COLA) will begin with benefits payable to more than 68 million Social Security beneficiaries in January 2025. Increased payments to approximately 7.5 million SSI beneficiaries will begin on Dec. 31, 2024. The COLA increase also applies for Americans who rely on VA disability, military retirement, and other government benefits. Over the past decade, the COLA increase has averaged about 2.6 percent. This year’s figure happens to be the lowest adjustment since 2020, which was set at 1.4 percent.

The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits isn’t eroded by inflation. It’s based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. This announced increase is lower than last year’s increase of 3.2 percent for 2024.

COLA Adjustment Applicability

COLA adjustments don’t apply only to Social Security recipients. When you process income certifications, be mindful of the following individuals to which the adjustments also apply:

• Retired military veterans
• Disabled veterans
• Veterans’ pension benefits recipients
• Survivor benefit annuitants
• Surviving families of veterans
• Social Security recipients
• Federal civilian retirees
• Supplemental Security Income (SSI) recipients
• Social Security Disability Insurance (SSDI) recipients
• Medicare Extra Help and Medicaid recipients
• Federal and state food and housing assistance program participants

Projecting 2025 Income

When determining the income of residents or applicants, owners and managers should use the new COLA rate when projecting income for 2025. The 2.5 percent increase will be reflected in January 2025 for Social Security benefit payments. These payments are based on December 2024 benefits. And the new COLA adjustment for SSI recipients goes into effect on Dec. 31, 2024, for January 2025 payments.

Owners and managers should avoid making adjustments in December 2024 for tenants who receive Social Security or SSI benefits. Income calculations for rent and eligibility must reflect the 2025 COLA starting in January and not before. The 2.5 percent COLA can be applied by multiplying the current award amount by 1.025. Remember to apply the COLA to benefits for the appropriate number of months based on the effective date of the certification.

For example, Bill would like to move in on Dec. 1, 2024. Bill’s 2024 gross Social Security monthly amount is $750. You will calculate his Social Security income as follows:

$750 x 1 = $750 (December 2024)

$750 x 1.025 = $768.75 (2025 monthly amount)

$768.75 x 11 = $8,456.25 (January–November 2025)

Therefore, you would add $750 to $8,456.25 to come up with $9,206.25 (12 months) for Bill’s annual anticipated income. If you’ve already processed move-ins for January 2025, you should review the household income and apply the COLA to benefits issued by the SSA since it’s a known anticipated change in income.

SSA Verifications

You can use the SSA benefit, award letter, or Proof of Income letter provided by the tenant or applicant that includes the COLA adjustment if the date of the letter is within 120 days from the date of receipt by the owner.

For a third-party verification directly from the SSA, don’t send tenants or applicants to the SSA office. Tenants or applicants can request benefit information from the SSA using the SSA’s website or toll-free number.

To obtain benefit information using the SSA’s website, the applicant can visit www.ssa.gov/myaccount/proof-of-benefits.html and log in to My Social Security to obtain a benefit verification letter. A tenant or applicant who hasn’t set up an account can easily create one.

To obtain benefit information using the SSA’s toll-free number, an applicant would call the SSA at 1-800-772-1213. The benefit verification letters may be requested 24 hours a day using the automated telephone service. TTY 1-800-325-0778 is available Monday through Friday between 7 a.m. and 7 p.m. for individuals who are deaf or hard of hearing. This information is free, and the tenant should receive the letter in the mail within 10 days.

Once the site obtains the benefit verification letter for use in calculating a tenant or applicant’s income, keep a copy of the letter in the tenant’s file and return the original to the tenant or applicant for their records.