The new cost of living adjustment (COLA) increase for the next year has finally been confirmed by the Social Security Administration. People had been waiting for months. The Bureau of Labor Statistics says that the COLA will go up by 2.5% in 2025.
This means that starting in January, retirees will get about $50 more in their checks. The cost-of-living adjustment (COLA) is linked to changes in inflation. This means that if inflation goes up, the annual increase will also go up.
The rate of 3.2% for 2024 was based on higher inflation at the time. The rate is found by taking the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter.
Retiree checks will officially increase $50 on average in 2025
This is the smallest annual increase for pensioners since 2020, when they got a 1.3% raise. Before COVID-19, the rate went through the roof. This year, however, the rate of price increases has slowed to a more normal, but still high, level.
The Fed wants the inflation rate to be 2%. A 2.5 percent increase will also be given to people who get Supplemental Security Income, which is meant to help the elderly and disabled.
The Social Security Administration says that the whole increase will help more than 70 million Americans.
The cost-of-living adjustments (COLAs) that come with Social Security are very important for millions of older Americans who are having a hard time paying their regular bills.
The annual COLA increase is very important for people who get Social Security because it helps seniors keep their purchasing power as the cost of living rises due to inflation.
Since lawmakers made COLAs automatic in 1975, Social Security benefits have gone up (or stayed the same) based on data on inflation.
Even though the premiums went up, beneficiaries should still think about something, especially if they are getting retirement checks: their Medicare Part B premiums could cut into their monthly income.
Medicare Part B premium could affect retiree checks despite COLA increase
If a senior is on both Social Security and Medicare, their Part B premiums will be taken out of their monthly payments automatically. People who get Social Security lose some of their COLA every year when the cost of Medicare Part B premiums goes up.
The Centers for Medicare and Medicaid Services just released a list of prices they think Medicare will cost in 2025. The regular monthly Part B premium will go up from $174.70 to $185 in the new year. That is an increase of $1.
This also means that the average retiree who gets Medicare and Social Security will not get an extra $49 a month starting in 2025.
That price increase now looks more like $39. It might not be a big deal for seniors who have a lot of savings or other sources of income besides Social Security.
But for retirees who depend on Social Security for most of their money, the Part B price increase could be a huge blow, cutting their already small COLA even more.
How should beneficiaries cope with lower retiree checks next year?
Since retirees’ checks are only going up by 2.5%, it is clear that seniors who are already having a hard time with money would not want the costs of Medicare Part B to go up.
If you are worried about your finances in the coming year, you should look into your options for joining the gig economy.
One great thing about gig work is that it can be a very flexible way to make money. You can do many things on your own time, like walk dogs, drive for a ride-hailing service, or do other things.
It is also possible that the money you make from this job will be a lot more than the extra money you get from Social Security next year.
If that is what you want, you can also get a more normal part-time job with set hours. Being on a schedule might be fun for you if you like having things happen in a certain way.
Any way you look at it, you should be ready for the possibility that your retirement checks will not go up by much next year because the cost of Medicare B has gone up so much.
If you depend on Social Security a lot to make ends meet, you should look into other options. Making your own money could free you from a lot of financial stress.
