Seniors to Receive 2.5% Social Security Benefit Increase in 2025
After months of anticipation, the Social Security Administration has confirmed that benefits will see a 2.5% cost-of-living adjustment (COLA) starting in 2025.
This adjustment is far from the lowest increases recorded in the program’s history; in fact, there have been occasions where seniors received no COLA at all. However, with recent hikes lingering around 5-8%, many may find this 2.5% adjustment underwhelming.
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For those already struggling to meet their expenses on their current monthly benefits, a 2.5% increase may not significantly improve their situation as January approaches. If you’re on the fence about how to adjust your budget to make the most of your Social Security COLA, consider these three strategies.
1. Consider Part-Time Work
If Social Security benefits don’t cover your living expenses and savings are limited, exploring part-time job opportunities could be beneficial. This doesn’t mean you must abandon retirement completely. A flexible part-time position can supplement your income.
For those concerned that extra income may reduce Social Security benefits, the rules can work in your favor if you’ve reached full retirement age. In that case, additional earnings won’t affect your benefits. However, if you haven’t reached that age, Social Security’s earnings-test limit applies.
In 2025, individuals can earn up to $23,400 without risk of benefit reduction. Beyond that limit, expect $1 of benefits withheld for every $2 earned. If you reach full retirement age in 2025, the threshold increases to $62,160, with benefits suspended at a rate of $1 for every $3 earned over that limit.
2. Explore Housing Options
Downsizing or relocating may offer financial relief. Research housing costs in your area, and consider moving if a 10% to 15% reduction in monthly expenses is possible.
If relocation is feasible, look for communities where living costs are lower. However, weigh the pros and cons, as economically appealing areas might lack quality healthcare or reliable Medicare options.
3. Reach Out to Family
Many seniors find it helpful to seek support from family members when facing financial difficulties. If working or relocating isn’t viable, consider whether a family member can assist without a significant financial burden.
Possibly, a grown child may have room to spare, allowing you to live rent-free for a time. This can provide necessary breathing room to save more. Alternatively, if maintaining your home proves challenging, ask a relative to lend a hand with chores that you used to manage easily.
Although a 2.5% increase isn’t the wish of many seniors, judicious financial adjustments can make it work. Careful planning will help in maximizing your benefits during these times.
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