A small 3.2% Cost-of-Living Adjustment (COLA) will be made to social security benefits in 2024 to try to keep up with inflation. These benefits are an important source of income for millions of Americans.
Still, there are doubts about whether or not this raise is enough, especially since Medicare costs are going up and retirees are having a very hard time with money.
It is expected that the COLA will be lower in 2025, which makes people even more worried about the buying power of retirees. Over 71 million Americans—retirees, veterans, and their dependents—have relied on Social Security payments for decades to meet their basic needs.
Social Security payouts against rising costs
The Cost-of-Living Adjustment (COLA) was first used in 1973 and has been used every year since 1975 to help these funds keep up with inflation. Because of this change, Social Security payments have mostly been able to keep up with rising prices.
In 2024, the COLA was raised by 3.2%, which caused claimants’ monthly payments to go up by a small amount. This change was made to help recipients deal with the rising cost of living, especially now that there are worries about inflation.
But some people aren’t sure if this raise will be enough to keep people’s purchasing power, especially those who are on fixed incomes.
At first, it was thought that the COLA would go up by 2.57% in 2025. If approved, people who get Social Security would get an extra $50 a month on average. Experts are worried that this change might not be enough to meet the financial needs of seniors, even though it would bring them some comfort.
The planned rise in Medicare Part B rates could make things even more expensive for retirees. To cover medical costs and outpatient care, these rates have been steadily going up, often faster than changes in the COLA. So, for many seniors, the net benefit rise may be a little less after Medicare premiums are taken out of their Social Security income.
Social Security payments depend on how much money was paid in taxes, how long someone worked, and when they retired. As of 2024, the following groups of beneficiaries received the following average monthly payments:
- About $1,907 was given to retired workers each month. Couples in retirement who filed jointly took home about $3,303 a month.
- The average monthly survivor benefit was $1,509.50. On average, retired workers’ spouses made $910 a month.
- An average of $892.39 was given to retired workers’ children each month.
- Individuals who received Supplemental Security Income (SSI) were paid an average of $943 per month.
- Couples that received SSI benefits were typically paid $1,415 a month.
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