2025 Social Security COLA Increase: As 2025 draws near, a lot of people are thinking about how the cost-of-living adjustment (COLA) will affect their Social Security benefits.
The official number won’t be released by the Social Security Administration until October, but it’s important to think about how this change will affect retirees and people who get spousal payments.
2025 Social Security COLA Increase
The exact amount won’t be available until later because the Social Security COLA is based on inflation data from the third quarter of the year.
Experts predict that the 2025 COLA will be smaller than the 3.2% increase seen in 2024 and much lower than the 8.7% raise in 2022, which was a year with high inflation, as inflation is currently decreasing.
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The Senior Citizens League’s most recent projections indicate a 2.63% rise by 2025.
Not just retired workers will enjoy a rise in their Social Security benefits.
A COLA boost will also be given to spouses who meet the eligibility requirements for Social Security payments based on their partner’s income.
Spousal benefits are typically less than retirement benefits, therefore there will be less of a monetary boost overall.
For instance, the average retired worker getting $1,918 per month as of June 2024 would see a boost of almost $50 per month with a predicted 2.63% COLA.
Spousal benefits recipients, who currently receive an average of $911 per month, can anticipate a rise of about $24 per month.
A couple will enjoy a monthly rise of about $74 if one partner receives retirement benefits and the other spousal benefits.
How COLA adjustments are implemented
The primary insurance amount (PIA) is the benefit a person would receive if they claimed Social Security at their full retirement age. The cost-of-living adjustment (COLA) is added to this amount.
For example, if someone’s PIA in 2023 was $2,000, a 3.2% COLA would increase their benefit to $2,064.
This adjustment applies to disability, survivor, and spousal benefits as well.
Keep in mind that the PIA and the actual monthly benefit might not be the same. People who claim benefits early receive smaller amounts, while those who wait until after their full retirement age get larger payments, but these increases stop at age 70.
Also, Medicare premiums are often deducted from Social Security benefits, which might affect the overall increase.
While the COLA provides a boost, it might not cover all living expenses, especially if inflation continues. It’s a good idea for beneficiaries to start budgeting before the official COLA announcement.
If the COLA isn’t enough, consider using personal savings, finding a part-time job, or renting out property for extra income.
Additionally, eligible individuals and couples might qualify for other government benefits like Supplemental Security Income (SSI), which also gets adjusted annually and could provide more financial help.
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