Every year at the start of a new year, the US government changes Social Security checks to reflect the cost of living. This change is meant to directly fight price inflation, making sure that senior Americans can keep paying their bills without having to worry about money.
The main goal of the COLA is to keep seniors’ ability to buy things. Without this change, many Americans would have a hard time with rising prices, which could put their financial safety at risk.
This small rise every year helps make sure that retirees and other beneficiaries don’t lose their money because of inflation. It’s important to note that the COLA doesn’t just affect Social Security retirement payouts; it also affects other checks, like Supplemental Security Income (SSI).
2025 COLA Increase: How Early Payments Will Increase Retirees’ Purchasing Power
The Social Security Administration has stated that the first COLA payments will be sent out early in 2025, which is very exciting. In other words, if you qualify, you can expect to get your adjusted check sooner rather than later, which will give you a welcome cash boost.
- Helps combat inflation
- Ensures retirees maintain purchasing power
- Applies to both Social Security and Supplemental Security Income
- Early payments for 2025 COLA
If you qualify, all you have to do is wait for your check to arrive and enjoy the extra money without any trouble. The COLA is an important way to protect the financial health of older people, which makes each new year a little easier to handle.
Understanding the First Social Security Payment of 2025
The January Supplemental Security Income (SSI) payment is the first official payment from Social Security in 2025. It includes the Cost of Living Adjustment (COLA). These perks are usually given out on the first of every month. If the 1st happens on a holiday or weekend, though, the payment is moved to the business day before.
January 2025 Payment Schedule
As of January 2025, January 1 is a holiday. This means that the Supplemental Security Income check will be sent to December 31, 2024 now. The 2025 COLA will be part of this early payment, even though it’s due in 2024.
What to Expect from Your January SSI Cola Payment
Today, the largest amount will not be $943 as usual. It will be that amount plus the COLA for 2025 instead. The exact amount hasn’t been decided yet, but estimates say that the COLA will go up by about 2.5%. So, you should add this percentage to your monthly SSI check and any other payments you get from Social Security.
- Payment Date: December 31, 2024
- Includes: January 2025 COLA
- Expected Increase: Approximately 2.5%
What the COLA increases have been over the last 5 years in the United States
- 2019: 2.8% This adjustment was made to reflect moderate inflation, providing beneficiaries with a modest increase in their benefits.
- 2020: 1.6% A smaller increase compared to the previous year, aligning with lower inflation rates experienced during that period.
- 2021: 1.3% This was one of the lowest COLA increases, reflecting minimal inflation impact on the cost of living.
- 2022: 5.9% A significant jump from previous years, this increase was in response to rising inflation rates affecting the cost of goods and services.
- 2023: 8.7% The highest increase in decades, this substantial adjustment was implemented to help beneficiaries cope with the sharp rise in inflation and the increased cost of living.
How is the COLA calculated each year?
Measuring Inflation with the CPI-W:
- The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is what the Social Security Administration (SSA) uses to figure out the COLA.
- The Bureau of Labor Statistics (BLS) makes the CPI-W, which shows changes in the prices of a market basket of goods and services that salary earners and office workers in cities usually buy.
Determining the Comparison Periods:
- Current Year Average: The SSA calculates the average CPI-W for the third quarter (July, August, and September) of the current year.
- Previous Year Average: The SSA references the average CPI-W for the third quarter of the last year in which a COLA was determined. This is typically the previous year unless there was no COLA.
If the CPI-W has gone up, the COLA number is rounded up to the tenth of a percent. This percentage rise is applied to benefits that start in December of this year and are paid out in January of the next year.
Also See:- In October 2024, Social Security will make 4 more payments for SSDI