As we move closer to 2025, millions of Social Security beneficiaries are set to see an increase in their paychecks thanks to the Cost-of-Living Adjustment (COLA).
The Social Security Administration (SSA) is preparing to announce the official COLA for 2025, a crucial change that ensures retirees and others on Social Security can keep up with the rising cost of living.
What is COLA and Why Does It Matter?
COLA stands for the Cost-of-Living Adjustment. It’s a yearly adjustment to Social Security benefits that helps recipients maintain their purchasing power even when the cost of everyday goods and services rises due to inflation. Essentially, it’s a way to make sure your benefits aren’t worth less over time.
Each year, COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics (BLS) measures how much prices are going up (or down), and then the SSA calculates how much to increase Social Security payments to keep up.
When Will COLA Be Announced for 2025?
The official announcement will be made on October 10, 2024, after the BLS releases its inflation report for September. The new adjustment will come into effect in January 2025, impacting over 71 million people who receive Social Security benefits.
What to Expect for 2025 COLA?
According to projections from The Senior Citizens League (TSCL), the COLA for 2025 is expected to be around 2.5%.
While this may be one of the smaller increases in recent years, it’s still essential for beneficiaries. The projected 2.5% increase reflects a period of relatively stable inflation.
Estimated Increase in Benefits for 2025
| Category | Current Average Benefit | Estimated Increase | New Average Benefit |
|---|---|---|---|
| All Retirees | $1,920 | $48 | $1,968 |
| High Earners (Top 10%) | $3,400 | $85 | $3,485 |
| Average Earners | $1,500 | $37.5 | $1,537.5 |
| Low Earners (Bottom 10%) | $800 | $20 | $820 |
For many beneficiaries, even a small increase can make a big difference. Those with higher current benefits will see a more substantial dollar increase. For example, high earners in the top 10% of Social Security recipients could receive an additional $85 per month.
Must Read: FED Warns of Potential Social Security Cuts by 2026 – What Does It Mean for Retirees?
What About Supplemental Security Income (SSI) Recipients?
Beneficiaries of Supplemental Security Income (SSI), a program for individuals with limited income and resources, will also see an increase in their payments due to the COLA. Here’s a look at the estimated changes:
| Category | Current Benefit | New Benefit | Increase |
|---|---|---|---|
| Individual | $943 | $967 | $24 |
| Couple | $1,415 | $1,450 | $35 |
| Essential Person | $472 | $484 | $12 |
This adjustment is crucial for low-income individuals and families, as it helps them keep up with the rising costs of essentials like food, housing, and healthcare.
How Can You Check Your New Benefit Amount?
Starting in early December 2024, Social Security will send out COLA notices to all beneficiaries. You can view your updated benefit amount online by logging into your “my Social Security” account. This is the fastest and most secure way to check your new benefits. If you don’t have an account yet, be sure to create one by November 14, 2024, so you can access your COLA notice.
You can also choose to receive email or text alerts when your COLA notice becomes available, making it even easier to stay informed.
Key Dates to Keep in Mind
- October 10, 2024: The official COLA announcement for 2025 will be made.
- Early December 2024: COLA notices will be available online and by mail.
- January 2025: The new benefit amounts will take effect.
Must Read: Why Some 62-Year-Old Retirees Aren’t Receiving Social Security? Find Out If You’re Affected!
Summary
While the expected 2.5% COLA increase for 2025 may be smaller compared to recent years, it’s still a vital boost for millions of Social Security beneficiaries. It’s essential to stay informed about these changes, especially if you rely on Social Security for a large part of your income. Be sure to check your “my Social Security” account in December to see your updated benefit amount and plan accordingly.
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.