As we approach 2025, the Social Security Administration (SSA) is set to implement a new Cost-of-Living Adjustment (COLA) to help retirees keep up with rising inflation. The COLA is an essential measure that ensures Social Security benefits maintain their purchasing power despite fluctuations in the economy.
The official COLA announcement will be made on October 10, 2024, after the Bureau of Labor Statistics (BLS) releases its inflation report for September 2024. This adjustment is expected to take effect from January 2025, and it will impact more than 71 million Social Security beneficiaries.
Understanding the Cost-of-Living Adjustment (COLA)
The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as measured by the BLS. This adjustment reflects the percentage increase in the CPI-W from the third quarter of the previous year to the third quarter of the current year.
For 2025, the COLA is expected to be around 2.5%, according to projections by The Senior Citizens League (TSCL). This would be the smallest increase in four years, reflecting the relatively stable inflation rates observed recently.
Who Will Receive the Largest Increase?
While all Social Security beneficiaries will see their benefits rise by the same percentage, those with higher current benefits will receive a more substantial nominal dollar increase. For example:
| 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 |
Supplemental Security Income (SSI) Increases
Beneficiaries of the Supplemental Security Income (SSI) program will also see an increase in their payments. If the 2.5% COLA projection holds true, here are the expected changes:
| Category | Current Benefit | New Benefit | Increase |
|---|---|---|---|
| Individual | $943 | $967 | $24 |
| Couple | $1,415 | $1,450 | $35 |
| Essential Person | $472 | $484 | $12 |
These adjustments aim to protect low-income Americans from the rising costs of living. The SSI program provides monthly payments to people with limited income and resources who are aged, blind, or disabled.
How to Check Your New Benefit Amount
Starting in early December 2024, the SSA will send COLA notices to all beneficiaries through their my Social Security accounts. You can log into your account to view your new benefit amount, which is faster and more secure than waiting for a mailed notice.
If you don’t have an account, you must create one by November 14 to access your COLA notice online. You can also sign up for text or email alerts to receive notifications when your COLA notice is available.
Key Dates to Remember
- October 10, 2024: SSA will announce the official COLA for 2025.
- December 2024: COLA notices will be available online and by mail.
- January 2025: New benefit amounts will take effect.
Conclusion
The upcoming COLA adjustment for 2025 will help millions of Social Security beneficiaries keep up with the rising cost of living. While the increase is expected to be smaller than in previous years, it will still provide a much-needed boost to retirees and SSI recipients.
As always, it’s essential to stay informed and regularly check your my Social Security account to view your updated benefit amounts and make necessary financial adjustments accordingly.
FAQs
1. What is the COLA for 2025?
The COLA for 2025 is projected to be around 2.5%, although the official rate will be announced on October 10, 2024.
2. How is the COLA calculated?
The COLA is calculated 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 previous year to the third quarter of the current year.
3. Who benefits the most from the COLA increase?
While all beneficiaries will receive the same percentage increase, those with higher current benefits, such as high earners, will see a larger nominal dollar increase.
4. How can I check my new Social Security benefit amount?
You can check your new benefit amount by logging into your my Social Security account online. If you don’t have an account, you need to create one by November 14, 2024.
5. When will the new COLA take effect?
The new COLA will take effect in January 2025, with beneficiaries receiving their adjusted payments starting in that month.
References
- Social Security Administration. “Cost-of-Living Adjustment (COLA) Information.” SSA.gov.
- Social Security Administration. “Social Security Benefits Increase in 2024.” SSA.gov.
- Social Security Administration. “Press Release.” SSA.gov.
