Social Security Payments to Only Increase 2.5% in 2025

Written by Chriss W. Street

Social Security Administration announced that the 72.5 million Americans receiving benefits will only see a 2.5 percentcost-of-living increase in 2025, down from 3.2% increase in 2024. The world’s largest retirement plan is still in a surplus with Social Security taxes equaling 37.35% of all federal taxcollections, while Social Security and Medicare spending equal just 35.68% of all federal spending.

Social Security is not a pension plan, but a general unsecured liability of the United States.  That means Social Security revenues that for the last 87 years have exceeded Social Security and Medicare spending, have been placed in a “Trust Fund” that was only allowed to buy short-term low-yielding U.S. Treasurybonds that only earn about 2.5% per year, versus about 2.8% for inflation.

The Social Security Act was signed into law on August 14, 1935. Taxes were collected for the first time in January 1937, and the first ongoing monthly benefits started in January 1940. Ida May Fuller, who had worked for three years and paid a total of $24.75 in taxes, was the first Social Security retiree in 1940.  She retired at age 65 and received an initial monthly check was $22.54. By living to 100, she collected a total of $22,888.92 in lifetime Social Security benefits.  

But rather than a Ponzi scheme, Social Security participants have essentially been massively subsidizing Congressional deficit spending.  Had the Social Security taxes been privately invested in stocks and bonds, the Trust Funds would have earned an average of about 6 percent more than the rate of inflation.  Several Federal Government pension funds are allowed to invest in private securities including the U.S. Thrift Saving Plan for government workers, and pension plans for the U.S. Federal Reserve Board, the U.S. Air Force and the Tennessee Valley Authority.    

The average 2025 Social Security monthly check for retired workers will increase by $49 from $1,927 to $1,976. For a couple with both partners receiving benefits, the estimated payment will increase by $75, from $3,014 to $3,089.The maximum benefit for a worker retiring at age 67 will increase by $196, from $3,822 to $4,018.

Social Security also provides benefits for spouses and disable workers.  The average widowed mother with two children will see an increase by $92, from $3,669 to $3,761.  Aged widows and widowers living alone will see their benefits increase by $44, from $1,788 to $1,832.  Disabled worker with a spouse and one or more children will see their benefit increase by $69, from $2,757 to $2,826.

The Brookings Institution estimates that the Social Security and Medicare Trust Funds will run out of cash by about 2038, then Congress will have to actually have to pay for promised benefits. America’s youth does not trust Congress honoring its promises, with 45% of Gen Z and 39% of Millennials believingthey will never receive any return on their Social Security payments they make each month

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