Social Security Benefit Increases for 2025 What We Know So Far
The Social Security Administration calculates the cost-of-living adjustment each year so that the dollars of Social Security recipients keep pace with inflation and maintain their purchasing power. COLA does not necessarily have to increase every year, but it often does, just so that elderly people and other pensioners can barely manage their expenses.
How COLA is Determined
COLA was derived from the Consumer Price Index for Urban Wage Earners and Clerical Workers, better known as CPI-W. The CPI-W is part of the overall Consumer Price Index. It utilizes weighted categories. For COLA purposes it is the data from the third quarter of the current year-July, August, and September-that is used. The information for this quarter is compared with the same period of the prior year to ascertain the percentage change in Social Security benefits.
Current Projections for 2025 COLA
Although the actual COLA for 2025 will not be published until October, there are some organizations that have already made projections using available data. Projections can be different and changeable across new data releases due to instability in the economy.
Professional Projections
Federal Reserve and Overall Consensus
Initial estimates range from 2.6% to 3.2%.
The April CPI report was 3.4%, so the COLA could be above 3.2%.
The Senior Citizens League
This bipartisan elder’s group predicts that 2025 will face a 2.66% COLA.
The seniors group estimate has a lot of significance for the seniors.
Social Security Administration (SSA)
SSA predicts an average pay increase of 2.6%
The current average retired workers benefits are at $1,907.
For the year 2025, this amount will increase to $1,956
Estimate SSI 2025:
$943-$967 (for individual).
$1,415-$1,451 (for couple).
What it means in 2025
The COLA will likely increase during continued inflation and economic vagaries for 2025. Here are some of the projected numbers:
Retired Workers
Current Average: $1,907
With a 2.6% Increase: $1,956
SSI Recipients
Individual: From $943 to $967
Couple: From $1,415 to $1,451
The real COLA for 2025 hasn’t been announced yet, but the expectation continues to be upward. The government, based on the CPI-W for July, August, and September, is expected to post the adjustment in October. This increase is consequently going to begin taking effect during December, when Social Security and SSI recipients can expect their January payments to be increased.
Conclusion:
It will come as a relief to millions of beneficiaries by 2025 with changes to Social Security benefits. Increases coming this year will counteract inflation; therefore, for those dependent on Social Security to get through the day-to-day expenses of retirement, being disabled, or relying on someone with disabilities, increases are good news.
Even if all the nitty-gritty details have yet to be sorted out, you can be ready by understanding what changes and the COLA are likely to look like.
For those on Social Security, these increases may well affect the level of your benefit payments and will likely affect who is eligible or how much will be paid in benefits. Be prepared to benefit from the next changes by adjusting your preparation before retirement or upon receiving your Social Security benefits.
Given continued efforts to beat inflation and adjust the economic atmosphere, these hikes will be that lifeline that many across this country need so desperately. Wait for official updates in the months ahead to have a full picture of how those increases will fit into your world.
FAQS:
What is COLA?
COLA means cost-of-living adjustment, a rise every year just to keep Social Security checks current with inflation.
How is the COLA determined?
It’s tied to the average percentage rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year.
When do they announce the 2025 COLA?
The formal announcement will occur in October 2024.