COLA Increase 2025: Millions of Americans depend on their Social Security payments to get by. Though retired workers are the primary beneficiaries, the government also provides benefits to spouses, children, and disabled people.
Fixed monthly payments would quickly reduce a worker’s purchasing power even in cases where Social Security benefits are initially based on their earnings history. A 1973 law created yearly cost-of-living increases, which became operative in 1975.
According to USAToday, year-to-year variations in these cost-of-living increases, or COLAs, can be rather noticeable. They don’t, according to some, fairly reflect growing elder spending. 2024 will see a 3.2% Social Security COLA.
COLA Increase 2025
Senior Citizens League updated their 2025 COLA projection to 2.6%. This estimate is updated monthly using the most current consumer price index data.
The COLA is calculated using the urban wage earners and clerical workers consumer price index. The Bureau of Labor Statistics calculates the CPI-W each month. CPI-W measurements from July through September determine the final COLA amount for every year.
2025 Social Security COLA: What are the Changes and Benefits?
The March CPI-W rose 3.5% year over year. The consumer price index increased by 3.5% for all urban consumers.
If the COLA goes up by 2.6%, the increase will be about $45. You can buy what for that? Shannon Benton, executive director of TSCL, said, not much.
COLA (2024)
In 2024, the Social Security Administration estimates that Social Security retirement income rose by more than $50 on average.
The average amount of money retired workers made each month went up from $1,848 in 2023 to $1,907 in 2024.
What is COLA for Social Security?
For many people who get Social Security, the COLA raises their monthly income. Just like workers may get a pay raise every year from cost-of-living increases, people who get Social Security often get a pay raise every January.
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While some could see it that way, Judi Leahy, a senior wealth advisor at Rye, New York-based Citi Personal Wealth Management, clarified that it’s not a bonus.
The idea behind the COLA is to help payments keep up with the cost of living. No matter what the exact number is, a stable retirement income rests on planning and managing money wisely.
Social Security Benefit: What’s the Maximum Benefit for Retirees and Beneficiaries in 2024?
Economists anticipate lower inflation
It’s crucial to remember that these estimates are predicated on inflation statistics from earlier in the year, and third-quarter data will be used to calculate the actual COLA for 2025. Even while some seniors might not have expected the predicted 2.6% increase, it nonetheless emphasizes the importance of resiliency and smart financial planning.
It is recommended that seniors look into alternate sources of income to augment their retirement benefits, such as gig economy possibilities. Moreover, increasing savings throughout the working years might lessen the impact of modest COLAs in retirement and act as a cushion against economic uncertainty.
Retirees may be concerned about the possibility of lower COLAs, but it’s important to wait for the official announcement in October. Regardless of the exact amount, long-term planning and responsible money management are essential for guaranteeing financial security in retirement.
In conclusion, retirees have difficulties due to sticky inflation and limited COLAs, but these factors also emphasize how critical flexibility and resilience are to surviving changes in the economy. Seniors can more effectively manage the volatility of the financial environment by being proactive in diversifying their sources of income and increasing their savings.
