The Social Security Administration (SSA) has said that the Cost of Living Adjustment (COLA) for 2019 will be 2.5%. The goal of this raise is to keep people’s purchasing power up in times of inflation and general price rises.
For a lot of retired people and disabled people, this change means a big difference in their regular income.
The COLA increase is something that is done every year to make sure that people who get benefits do not lose buying power when the cost of living goes up.
If this change is not made, Social Security funds might not be enough to cover basic costs. For this reason, knowing how this change impacts various types of benefits is very important for millions of Americans’ financial planning.
Impact of the COLA increase on Social Security
The COLA is used to make sure that Social Security payouts keep up with inflation.
Even though a 2.5% rise might not seem like much, it can make a big difference in how much money a receiver has each month. This change helps to balance out the rising prices of things like food, housing, and medical care.
When it comes to real life, the COLA raise means that retirees and disabled people will get bigger checks starting next year.
It is important to know that the Consumer Price Index for Urban Workers (CPI-W) is used to figure out the COLA. The CPI-W tracks changes in the prices of goods and services in the market.
Average Social Security Checks by Benefit Type
If you take into account the 2.5% COLA increase, here are the average Social Security checks for three key groups of recipients:
To get the Full Retirement Age (FRA) benefit: The average monthly payment for people who leave at full retirement age will go up from about $1,800 to $1,845 because of the COLA.
Early Retirement Benefit (Early Retirement Age): After the change, people who decide to wait to retire in order to get a bigger benefit will see their monthly cheque go from about $2,200 to $2,255.
Get help for a disability: There will also be a rise for people who get disability benefits. The average bill will go up to $1,332 per month from $1,300 per month with the new COLA.
The COLA raise is a key change that keeps Social Security recipients’ quality of life high even though prices are going up. Even though the increases may not seem like much, they have a big effect on the millions of people who count on this income over time.
Comparison of the COLA 2025 with previous years
The 2.5% COLA for 2025 is about the same as the changes made in the previous years. Due to high inflation around the world, the COLA rise in 2023 was 8.7%, which was one of the biggest in decades.
This big change was made to offset the sharp rise in the prices of goods and services that people need. In comparison, the 2024 COLA was much lower, rising only 3.2%. This showed that inflation was rising less quickly.
Even though the 2025 adjustment is less than the 2023 adjustment, it is still needed to keep up with the rising cost of living.
Except for a few years like 2023, yearly COLA increases have been pretty small over the last ten years, averaging close to 2%. Inflation rates of 2.5% in 2025 are still in line with recent history, even though they are still far below the highs seen during years of high inflation.
In 2025, Social Security checks will go up, but not as much as they have in the past.
Also see:-3 big changes in Social Security to be implemented by the SSA starting October 2024
Leave a Reply