Soon, the new cost of living adjustment (COLA) for 2025 will be announced by the Bureau of Labor Statistics. This means that the COLA for 2024 is no longer in effect. If more than half of your retired income comes from Social Security, you might want to know how much more you’ll get in 2025.
You’ll have to wait a little longer, which is sad. People who get Social Security should know that the cost-of-living increase, or COLA, for 2025 won’t be officially released by the Social Security Administration until October 10.
This is because the inflation figures from the third quarter is used to make those COLAs. Also, since the third quarter of the year is still going on, it is too early to say for sure what will happen.
Social Security will change after the new COLA announcement in October
It is possible to make predictions about next year’s Social Security COLA based on current inflation rates. The most current estimate also says that the rate of growth will be 2.5% in 2025. Not only is a 2.5% increase the smallest COLA that has been revealed since 2021, it was already a pretty small increase.
While inflation has been going up since 2021, Social Security retirees have been getting really big COLAs, so a 2.5% rise may seem even smaller.
You might not feel good about the idea that your COLA will reach its highest point of 2.5% in 2025, but there is some good news that you should know about. The Consumer Price Index for Clerical and Wage Earners changes from one year to the next. This is what Social Security COLAs are based on.
When prices go up, Social Security benefits normally go up by a lot. When inflation goes down, benefits go up less. Seniors are thinking about the second option for 2025. There is one small good thing about a 2.5% Social Security COLA, though: It means that living costs aren’t going up as quickly as they used to.
But let’s look at it another way. Your Social Security payments may have gone up a lot in the last few years. Most likely, though, you also thought about how prices had gone up at the food store, pharmacy, and most other places. As inflation goes down, you may spend less on these and other needs, but it should balance out in the long run.
Should beneficiaries have alternative income sources besides Social Security payments?
A small cost of living adjustment (COLA) for 2025 may worry a lot of seniors who don’t have any funds and only get money from Social Security to pay their bills. But it’s scary to live this way. If you’re retired and in this position, working in the gig economy can be a great way to make extra money and save for emergencies.
That way, you’ll have a safety net in case you have to pay for something unexpected or the cost of living goes up quickly before your Social Security benefits can change.
Still, if you haven’t retired yet, pay attention to how worried current seniors are about their Social Security COLAs. You don’t want to be in a situation where you need the yearly increase in benefits to live.
Instead, use the time you have to work to save money so that you can easily add to your Social Security income after you retire. If you have a good nest egg, you won’t have to worry about the cost of living change every year when you retire.
How can the 2025 COLA impact Social Security benefits?
Millions of seniors are still waiting for the official cost of living adjustment to be released in October. This is because it will tell them how much money they will get in January.
The 2025 COLA might be about 2.57%, which is less than the current 3.2% rise, according to the most recent predictions. If this percentage is put into action, this is how retirees’ Social Security benefits will go up starting in January 2025:
| Retirement benefits | Social Security checks | 2.57% COLA increase |
| On average | $1,900 | $1,949 |
| Age 62 | $2,710 | $2,780 |
| Age 67 | $3,822 | $3,920 |
| Age 70 | $4,873 | $4,998 |
Also See:- Social Security certifies the new check increase for 2024: The announcement date is not specified