The Social Security Administration unveils the much-anticipated 2025 cost-of-living adjustment (COLA) on Oct. 10, 2024. As retirees await this crucial announcement, early data hints at a dip compared to recent years.
This potential downturn might trouble seniors grappling with soaring expenses and limited retirement income avenues. Nonetheless, bear in mind that each recipient’s benefit sees a unique rise. Here’s how to gauge if you stand to benefit from an above-average bump next year.
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Forecasting the Impact of COLA on Your Social Security Benefits
Despite all beneficiaries experiencing a proportionate percentage hike with the new COLA adjustment, the dollar-value jump varies due to diverse benefit amounts. For instance, the average Social Security benefit for retired workers tallies $1,920 monthly as of August 2024. If your current benefit exceeds this average, you’re likely to relish an above-average COLA enhancement in 2025 by dollar value.
Projections from The Senior Citizens League indicate a probable 2.5% uptick in the 2025 COLA. This surge would push the $1,920 standard benefit to $1,968 per month, translating to a $48 upsurge. Unless the COLA underperforms this estimate, expect an extra $48 or more in your monthly Social Security payments if you presently receive beyond the $1,920 benchmark.
To get a rough estimate of your 2025 benefits, add 2.5% to your ongoing payments. Be mindful, though, that this figure remains speculative until the official disclosure on Oct. 10.
The anticipated 2025 COLA might fall short of offsetting the escalating living costs pinching certain retirees over the past year. Unquestionably disheartening, this shortfall often triggers criticism toward the government’s COLA calculation methodology. Unfortunately, only government regulators can pivot this approach, leaving retirees to explore supplemental income sources.
While personal savings prove advantageous for those with substantial nest eggs, many retirees grapple with insufficient retirement funds, compelling them to seek alternative income streams. Re-entering the job market, while not ideal, can provide steady paychecks. Job seekers often opt for flexible roles aligning with their interests, such as part-time or remote positions. Remember, the aim is to bolster Social Security and personal savings, not fully replace them.
Eligibility for additional government benefits can ease essential expense burdens concerning food, housing, utilities, and healthcare. The application process for these benefits demands time, urging prospective recipients to apply promptly if anticipated requisites might arise in 2025.
Upon the 2025 Social Security COLA disclosure, preemptive budget planning for the upcoming year is advisable. Develop a financial blueprint before January to map out withdrawals from personal savings and calculate other income sources to meet your expenses.
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