Once the official cost of living adjustment (COLA) for 2025 is released, the Social Security Administration is ready to add this increase to future Social Security benefits for the following year.
Social Security is very important for most retirees because it provides about 30% of the income for Americans aged 66 and up.
The Social Security Administration (SSA) says that for people aged 65 and up, Social Security makes up 90% or more of their income for 15% of women and 12% of men.
As the cost of living rises, Social Security benefits are usually raised to help retirees keep up with the times. This is one of the great things about the program. Not many people were happy when the latest COLA was announced.
Social Security check changes from COLA will become effective on January
The cost of living adjustment (COLA) increase is a big worry for the millions of people who depend on Social Security benefits to pay their bills. The most recent COLA to be announced is the 2.5% one that will start in 2025.
A rise of 2.6% per year on average over the last 10 years is very close to this. A few of the most recent Social Security COLAs can be seen below:
| Year | COLA increase |
| 2015 | 1.70% |
| 2016 | 0% |
| 2017 | 0.30% |
| 2018 | 2% |
| 2019 | 2.80% |
| 2020 | 1.60% |
| 2021 | 1.30% |
| 2022 | 5.90% |
| 2023 | 8.70% |
| 2024 | 3.20% |
The people who get the money should know that they are not the only ones who do not think a 2.5% increase is important. A poll by The Motley Fool found that 54% of retirees did not think it was enough.
In fact, 31% of those who answered said it was “completely inadequate.” As of September, the average monthly retirement benefit was $1,922, or just over $23,000 a year.
This supports what beneficiaries say. With that much money, most of us could not live on our own in retirement. With a 2.5% increase, it only goes up to $23,641, which is an increase of about $577 and $48 each month.
Even worse, COLAs will let you down a lot more often unless they are linked to the CPI-E instead of the CPI-W, which is a better measure of inflation.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is meant to show how much things cost for workers, while the CPI-E is meant to show how much older people buy.
Because of this, it puts medical care at the top of the list, even though prices have gone up more than usual.
In what ways can recipients budget their retirement without relying too heavily on Social Security?
While you were working, you may have made more than the average person, but your larger Social Security benefits might not be enough to meet all of your needs and wants.
So, getting ready for retirement is very important. Setting up more than one way to make money for your retirement is a smart move. For sure, saving a lot of money and investing wisely are important for retirement.
Figure out how much money you will need in retirement and then make a plan to get it. In this case, you might have the following ways to make money when you retire:
- Inheritance.
- Have worked part-time before retiring.
- Social security benefits.
- Stock dividend income.
- Rental checks for properties you own and rent.
- Income from one or more pension programs.
- Retirement income from one or more jobs you or your spouse held.
- Profit from selling stocks in your portfolio as needed.
- Income from interest-bearing investments, such as bonds, CDs, and bank accounts.
Some other ways to make extra money are to cash out a life insurance policy, get a reverse mortgage, rent out a house, and so on. If you put off retirement for just a few years, you can have a lot more money to spend.
Getting most of your retirement costs paid for by your own is a good idea no matter what you do. Spend some time making a good plan, and then make sure it is carried out correctly.
Also, you do not want Social Security to be your main source of income in retirement, and it probably will not be.
