Social Security Recipients to Receive 2.5% Cost-of-Living Increase in 2025

On Oct. 10, 2024, the Social Security Administration (SSA) made a notable announcement that will impact all retirees and individuals receiving Social Security benefits, including Supplemental Security Income.

Here are the details of this announcement and how it will affect your benefits.

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Significant Change from the Social Security Administration

The SSA’s announcement centered on the cost-of-living adjustment, or COLA, which ensures benefits keep pace with inflation.

COLAs are essential as they adjust benefits annually for rising costs. If retirees received the same benefits year after year, their purchasing power would decline due to increasing prices.

To counteract this issue, a formula based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used. Each year, if the third-quarter CPI-W indicates a price increase in goods and services, retirees receive a COLA based on that increase.

This year, CPI-W data confirmed rising prices, leading the SSA to announce a 2.5% increase in benefits for recipients.

Beginning in January, retirees will notice an increase in their checks. The SSA estimates that the average boost will be about $50 per month for seniors.

What to Expect in Your Benefit Check

The SSA plans to send out personalized notifications in December detailing the specific increase in benefits for each recipient. This year’s notification aims to simplify the language for clearer understanding.

If you created a mySocialSecurity account before Nov. 20, you can check your COLA notification online, providing quicker access than waiting for the mailed notice.

While waiting for official numbers, you can get a ballpark estimate of your benefit increase by multiplying your current amount by 2.5%. Although this isn’t the exact calculation method used, it should give a close approximation of the expected increase.

Be aware, however, that Medicare premium increases for 2025 are still pending. Most experts anticipate these costs will rise, which might reduce the benefits from the COLA.

All Social Security recipients should take heed of this significant announcement to better plan and adjust their budgets in light of the upcoming cost-of-living adjustment.

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