Increase in Social Security checks for retirees starting this date

The Social Security Administration (SSA) is expected to announce the year 2025 Cost of Living Adjustment (COLA) on October 10, 2024. Until then, estimates can only be speculative as September data is not yet available and being analyzed. But even without the full scope, current data suggests this lower COLA compared to recent years, which could disappoint retirees who are already struggling with rising expenses and have limited sources of retirement income.

If the COLA comes into effect, everyone Social Security recipients will increase their payments by the same percentage. However, the actual dollar increase will be different because individuals have different basic benefit amounts. For example this average Social Security benefit for retired workers was $1,920 per month in August 2024. If your current benefits are above this amount, you will receive an above-average dollar increase starting in 2025 COLA.

Based on estimates from The senior league, a nonpartisan group focused on advocacy for senior issues, the 2025 COLA should be around 2.5%. If this estimate is correct, the average monthly benefit would rise from $1,920 to about $1,968, an increase of $48. That is, as long as the COLA If your current benefit amount remains at or above this projected value, you can expect a monthly increase of at least $48 if your current benefit amount exceeds the average of $1,920.

If you want to have a rough idea of ​​your future benefits, you can work with the official to calculate the expected 2.5% increase in your current payment. However, please note that this is only an estimate COLA will be announced on October 10th.

What happens if the COLA isn't high enough to cover the cost increase?

There is a possibility that the year 2025 COLA may not be enough to offset the increase in the cost of living that many retirees have experienced over the past year. Many believe this is due to the government's calculation method COLAs, which may not fully capture seniors' actual spending, and there have been several attempts to change it from those currently in use Consumer Price Index for Urban Wage Earners and Office Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E).

The CPI-W and the CPI-E Both are measures of inflation, but they differ in the populations they target and the spending habits they capture. The CPI-W reflects the spending patterns of urban wage earners and office workers, making it more representative of younger, working-class households, while the CPI-E is designed to track the spending habits of Americans ages 62 and older and focus more on expenses that matter to older people, such as: B. Health care and housing. As a result, CPI-E has a slightly higher inflation rate than usual CPI-W This is because older people tend to spend a larger portion of their income on services with rising costs, such as medical care.

These differences have implications for policies such as Social Security Cost of Living Adjustments, that have traditionally been relied upon CPI-W, despite arguments that CPI-E could better reflect the needs of older beneficiaries. Unfortunately, only the state has the authority to change the calculation method, so pensioners have to look for other solutions to close income gaps.

Possible solutions

If you have personal savings, these can be helpful. Unfortunately, many retirees do not have sufficient retirement savings and are dependent on alternative sources of income. While returning to work isn't ideal, it is an option that can provide a stable income. Importantly, retirees can explore roles that are different from their previous career paths and often look for more flexible jobs that suit their interests. There are increasing opportunities for part-time work and remote positions that allow retirees to supplement their salaries Social Security Benefits and savings without committing to full-time employment.

Additionally, you may be eligible for other government assistance programs that help cover essential costs such as food, housing, utilities and healthcare. Because the application and approval process for these programs can take some time, it is advisable to apply as soon as you believe you may need assistance in 2025.

After Social Security COLA With 2025 officially announced, it's a good time to rethink your financial plans for the coming year if you haven't already. Creating a detailed budget before January will ensure you know exactly how much you can withdraw from your personal savings, how much Social Security benefits you will receive, and how much additional income you may need to make ends meet.