After making guesses for months and beneficiaries wondering how much their new check would go up, the Social Security Administration has finally confirmed the exact date that the cost of living adjustment (COLA) raise will be given. A little over 70 million Americans get Social Security benefits.
Their monthly payments are set to go up the least since before the coronavirus pandemic. Social Security benefits get a cost-of-living adjustment (COLA) every year based on inflation rates.
This makes sure that monthly payments keep up with rising costs. Social Security recipients got a 3.2% COLA in 2024, which was a big drop from the 8.7% COLA they got in 2023, which was the biggest gain in forty years.
Social Security Administration confirms new check increase in 2024
Based on current CPI inflation statistics, The Senior Citizens League (TSCL) predicts a 2.5% COLA starting in 2025. The 2.5% rise that is expected would be the smallest since 2020, when payments will go up by only 1.3% each month.
The expected raise is less than what beneficiaries have seen in recent years, but it is still about the same as what they have seen in the past. Over the past 20 years, the COLA has averaged 2.6%.
“One of the main reasons we push for a minimum 3% COLA is to make sure that seniors have enough to eat and live on with dignity,” said Shannon Benton, Executive Director of The Senior Citizen League.
TSCL statistics shows that 28% of seniors depend on Social Security, and about two-thirds depend on it for more than half of their monthly income. Adjustments for cost of living are based on figures from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter, which ran from July to September.
To find the COLA rate for the next year, you add up the total inflation for the previous three months, take the average, and compare it to the average for the previous year’s third quarter. The COLA rate is equal to the percentage change between the two.
As of October, the SSA did not officially release the annual COLA. This means that recipients will have to wait a few more months to find out the exact amount of their benefit raise. The Social Security Administration says that in 2023, more than 67 million Americans will get monthly payments from Social Security.
The overall amount of money they will get each year will be more than $1 trillion. The government body also said that near 30% of retired workers in the U.S. over 65 depend on Social Security benefits.
What you need to know about the potential change in COLA’s calculation method
A new law at the government level wants to change how COLA is calculated so that benefits are more in line with the real costs seniors face. Representative Ruben Gallego, a Democrat from Arizona, proposed the Boosting Benefits and COLAs for Seniors Act. This bill would change how the COLA is calculated for people who get Social Security.
The bill says that the Consumer Price Index for Americans 62 and older should be used to figure out the COLA instead of the Consumer Price Index for Clerical and Urban Wage Earners (CPI-W), which is what is done now. The suggested change is meant to give seniors a more accurate picture of the inflation they face, especially when it comes to housing, food, and health care.
Supporters say that the CPI-W doesn’t show how much costs are going up for seniors, which means that Social Security payments haven’t gone up enough.
Roman Ulman, head of AFSCME Arizona Retirees Chapter 97, said, “The COLA needs to take into account how inflation affects seniors so that we can pay our bills and keep our monthly Social Security benefits stable.”
The plan has been backed by many groups, such as the American Federation of State, County, and Municipal Employees, the Alliance for Retired Americans, and the AFL-CIO. Bob Casey, a Democrat from Pennsylvania, pushed for the companion bill in the Senate.