People in the United States who get Social Security will see a 2.5% increase in their monthly payments starting in January 2025. The Cost-of-Living Adjustment (COLA) is meant to help retirees and other recipients deal with the rising costs of living caused by inflation.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is what the COLA is based on. It shows how the prices of things like food, housing, and healthcare have changed over time. The program makes sure that Social Security payments keep their purchasing power over time by linking benefits to this index.
How this increase will impact your Social Security payments
The percentage may not seem like much, but for people who depend on Social Security as their main source of income, it can add up to a big difference. If you get Social Security benefits now, this 2.5% increase will have a direct effect on how much you get starting in January 2025. As an example:
- A monthly payment of $1,000 in 2024 will rise to $1,025 in 2025, resulting in an annual increase of $300.
- A monthly payment of $2,000 will increase to $2,050, translating to $600 more over the course of the year.
How to calculate your increase
If you’d like to determine how much more you’ll receive with this adjustment, you can calculate it yourself using the following steps:
- Identify your current payment: Check the amount you receive monthly from Social Security.
- Apply the percentage increase: Multiply your current payment by 0.025 (2.5%).
The result will be your new monthly payment amount.
For example, if you currently receive $1,200 per month, the calculation would look like this:
- $1,200 x 0.025 = $30 (monthly increase).
- $1,200 + $30 = $1,230 (new monthly payment).
Why the COLA is essential
A very important part of Social Security is the Cost-of-Living Adjustment. If beneficiaries don’t get it, their buying power could go down as the prices of basic goods and services go up.
Inflation has had a big effect on household budgets lately, especially for retirees who live on fixed incomes. The 2.5% increase helps ease some of this financial stress, so recipients can keep living the way they do now.
The higher payments will begin in January 2025. The exact payment dates will depend on factors like when you first started receiving benefits and your birth date:
- January 3: For those who began receiving benefits before May 1997.
- January 8, 15, and 22: For others, payments will follow the usual schedule based on birth dates.
In December 2024, the Social Security Administration (SSA) will send out notices detailing the new benefit amounts. These notices will be available both by mail and online through your personal account on the official Social Security website.
How to check your payment information
If you don’t receive the notification or want to confirm your new payment amount sooner, you can access this information online. Here’s how:
- Visit the official Social Security website.
- Log into your personal account or create one if you haven’t yet.
- Go to the “Benefits and Payments” section to view your updated amount.
Having an online account not only allows you to verify your payment details but also gives you access to official notifications and records for your files.
What this increase means for beneficiaries
The 2.5% increase may not seem like much, but it shows that Social Security is still committed to helping retirees and other beneficiaries keep up with the rising cost of living. For many, this change is necessary to cover basic costs and keep their finances stable.
For people who get Social Security, knowing how this change is calculated and when it will happen can help you make better plans for your money in 2025.
Go back and read your December notice again. If you have any questions, you can use your online account to find out more. With the 2025 COLA, Social Security continues to do its job of helping people who need it most with their long-term finances.
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