In the United States, reaching retirement age after years of arduous work is always a task and a goal for all workers. The Social Security Administration (SSA) has confirmed that, starting in 2025, retirement and disability recipients will get a 2.5% rise in their monthly benefits.
Using the Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the adjustment accounts for the annual increase in the Cost of Living (COLA).
Accordingly, Supplemental Security Income (SSI) participants will receive their first payment with an adjustment on December 31, 2024, according to the January 2025 payment schedule.
The reason for this advance is because the Social Security Administration only handles payments on business days, and January 1st is a holiday. Its 2.5% adjustment is less than rises from prior years.
As inflation increased, the COLA hit 8.7% in 2023, the highest level in forty years. According to data from the Bureau of Labor Statistics, the current declining trend has led to a more moderate adjustment for 2025.
Social Security payment schedule
Those who started receiving benefits prior to May 1997 will get their payments on January 3, 2025, according to the US Social Security Administration.The following are the dates of payment for those whose benefits were authorized later: Beneficiaries born between January 1 and January 10 are eligible on the second Wednesday of the month, January 8; those born between January 11 and January 20 are eligible on the third Wednesday, January 15; and those born between January 21 and January 31 are eligible on the fourth Wednesday, January 22.
In this sense, it is anticipated that the COLA will impact not just monthly benefits but also other facets of Social Security, like taxable income thresholds. The salary threshold for employees who reach full retirement age will increase from USD 21,240 to USD 21,935 in 2025.
To ensure that there is no penalty for earned income after full retirement age, the SSA deducts $1 for every $2 of additional income over this threshold.
Increase in the average retirement benefit
The Social Security Administration projects that by January 2025, the average monthly benefit for retirees will rise from USD 1,907 to roughly USD 1,954. Benefits for those who receive Social Security Disability Insurance (SSDI) will also rise proportionately.
According to SSA, a retired worker who reaches full retirement age will receive a maximum benefit income of USD 5,180 per month instead of USD 4,873.
Both electronically through their personal accounts on the my Social Security portal and through the mail, beneficiaries will receive comprehensive notifications regarding their updated benefit levels.
The significance of annual Social Security adjustments to account for increases in the cost of living, as determined by objective data from the CPI-W, has been underlined by the SSA’s Department of Labor.
In order to ensure that beneficiaries’ purchasing power stays constant despite economic volatility, the BLS measures changes in the prices of necessities to calculate the CPI-W. In other words, pensioners’ purchasing power is not impacted by price hikes or growing costs.
See Also: Social Security: New income limitations and COLA increases for February 2025
Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.