The long-awaited announcement regarding Social Security checks for retirees in October 2024 has been confirmed.
With less than two weeks to go, all Social Security beneficiaries will know exactly how much their monthly check will increase starting in January 2025.
The Social Security Administration (SSA) has made it official that the Cost of Living Adjustment (COLA) will be determined by October 10, 2024, following the release of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data for the third quarter of the year.
Key Date: October 10, 2024
The Bureau of Labor Statistics (BLS) will announce the CPI-W data on October 10, 2024, which is the key factor in determining the COLA for Social Security payments.
Once this data is available, the SSA will calculate the new COLA for 2025. The official announcement of the COLA is expected by mid-October.
What is COLA and How is it Calculated?
The Cost of Living Adjustment (COLA) is the annual increase in Social Security benefits aimed at helping recipients keep pace with inflation.
It is based on the CPI-W, which tracks the price changes of goods and services typically purchased by urban wage earners and clerical workers.
The SSA calculates the COLA by comparing the CPI-W figures from the third quarter (July, August, and September) of the current year with the same quarter from the previous year. The percentage difference determines the COLA for the following year.
Expected Social Security Increase for 2025
According to projections by the Senior Citizens League (TSCL), the COLA for 2025 is expected to be around 2.5%, a decrease from the 3.2% COLA in 2024. This adjustment reflects lower inflation in the U.S. economy. Based on this estimate:
- A typical Social Security check could increase by approximately $48 per month, bringing the average monthly payment to $1,968 in 2025.
While this increase may seem modest compared to previous years, it falls within the 20-year average for COLA increases, signaling that inflation is stabilizing.
What Does the COLA Affect?
The COLA increase impacts more than just the monthly Social Security checks. It will also adjust several other key values administered by the SSA:
- Supplemental Security Income (SSI): Monthly earnings and asset limits will increase.
- Maximum Social Security Benefit: At Full Retirement Age (FRA), the maximum benefit will rise.
- SSI Student Exclusion Amount: This will also be adjusted according to the COLA increase.
All these changes are essential for beneficiaries to understand how their financial situation will evolve in the coming year.
Concerns Over Social Security in 2025
The SSA continues to face financial strain, primarily due to the changing demographic trends. Fewer younger workers entering the workforce and paying Social Security taxes is putting more pressure on the system.
The Old Age, Survivors, and Disability Insurance (OASDI) program depends on contributions from workers, and with birth rates declining, the system is expected to face increasing challenges.
This has led to discussions about potential reforms, including finding new revenue streams to support the program in the long term.
The Importance of COLA for Social Security Beneficiaries
For millions of retirees, Social Security is a primary source of income. In fact, more than 50% of retirees depend on Social Security for a significant portion of their monthly income.
This makes the COLA adjustment critical, as it helps beneficiaries maintain their purchasing power amid rising prices. Without COLA increases, inflation would erode the value of Social Security benefits over time.
With the CPI-W data set to be released on October 10, 2024, the exact COLA increase for 2025 will be officially confirmed soon after. Social Security recipients can expect to see these adjustments reflected in their payments starting in January 2025.
Although the estimated 2.5% increase is smaller than in previous years, it reflects the current economic situation and inflation rates. Beneficiaries should stay informed and review their financial plans based on these updates.
FAQs
When will the 2025 COLA be announced?
The 2025 COLA will be announced after the CPI-W data is released on October 10, 2024. The SSA is expected to make the official announcement by mid-October.
What is the expected COLA increase for 2025?
The Senior Citizens League predicts a 2.5% COLA increase for 2025, slightly lower than the 3.2% increase in 2024.
How will the COLA increase impact my Social Security check?
Based on the estimated 2.5% increase, a typical Social Security recipient could see an additional $48 per month, bringing the average monthly check to $1,968.
When will the COLA-adjusted Social Security checks begin?
The COLA-adjusted checks will start being issued in January 2025.
Why is the COLA important for Social Security recipients?
The COLA helps ensure that Social Security benefits keep pace with inflation, protecting beneficiaries’ purchasing power as the cost of living rises.
