Every year, Social Security recipients look forward to getting more money.
Since most people have a fixed income (which does not mean it does not go up; it just goes up from a fixed amount that does not change, unlike salaries, which can grow very quickly), any rise is seen as good news, especially in years like this one when people are still dealing with high inflation and the effects of the pandemic.
It is not surprising that many seniors did not trust the 2025 adjustment, since inflation rose faster than the Cost of Living Adjustment (COLA) in the first half of 2024.
Those who thought it would be low were unfortunately right; on October 10, it was found to be 2.5%, and that number will not change.
A lower COLA means lower inflation data, but experts do not agree on whether this is a good thing or not. On the other hand, a higher COLA would give us some breathing room as long as it does not go up again in the new year.
Everyone can see that this increase will either make pensioners’ benefits go further or stay the same, depending on how much they were already getting.
Data from the Social Security Administration show that the average couple getting Social Security benefits in 2024 makes more than $36,000 a year, or $3,014 a month. This amount is not terrible, but it is not enough to meet most people’s needs.
But Social Security benefits were only meant to cover about 40% of costs in retirement. A pension or retirement account was meant to cover the rest.
The Social Security COLA increases
With the 2.5% increase, the average retired couple getting a $3,014 monthly Social Security benefit in 2024 will get an extra $75 in 2025, bringing their total check to $3,089. That is an extra $900 a year, but it might not be enough to stop costs from going up.
To get an idea of what your new benefit will be, multiply the amount you get in 2024 by 2.5%. This is because the cost-of-living adjustment (COLA) is a percentage of your current benefit.
To make sure you did your math right, official COLA notices will come in December. You can get them by mail or online through your Social Security account.
The increase that starts in January 2025 will show up on your check. The day of the month you were born determines when you will be paid:
- Born between the 1st and the 10th: January 8, 2025.
- Born between the 11th and the 20th: January 15, 2025.
- Born between the 21st and the 31st: January 22, 2025.
What if the COLA isn’t sufficient?
The truth is that for many families, this rise will not cover all of the additional expenses that 2024 has brought, and it hasn’t for a long time.
According to the Senior Citizens League (TSCL), benefits have lost around 20% of their purchasing power since 2010, and they are unlikely to regain their standard very soon.
This is because COLAs for seniors are calculated using the erroneous CPI, but lawmakers have yet to accept legislation to address the issue.
They employ the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rather than the CPI-E, which is weighted toward individuals aged 62 and up and focuses more on healthcare and other elderly issues.
There are some things retirees can do to enhance their savings or income while retired, some of which include:
- Reducing spending whenever possible.
- Working part- or full-time to augment your income
- Delaying retirement, if you are still working.
- Exploring federal assistance programs
