What is the projected 2025 Social Security COLA increase?
The Social Security Administration (SSA) adjusts the amount beneficiaries receive each year to keep pace with inflation. The cost-of-living adjustment (COLA) for 2025 will be announced on Oct. 10, 2024.
Analysts predict a smaller Social Security increase for 2024 due to inflation cooling.
In 2024, nearly 68 million Americans received monthly Social Security benefits, totaling approximately $1.5 trillion. Over a third of retirees consider their checks as a primary source of income, according to a Gallup survey conducted in April.
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What is the Social Security COLA?
The SSA has been adjusting benefits annually since 1975 to account for inflation, using the CPI-W as the basis for calculation.
In recent years, the COLA has been higher due to the post-pandemic jump in inflation.
- 2021: 1.3%
- 2022: 5.9%
- 2023: 8.7%
- 2024: 3.2%
The COLA has remained unchanged at 0% in 2009, 2010, and 2015 since its inception in 1975.
Since 2021, the Consumer Price Index has increased by 24.6%. If the adjustment for 2025 is 2.5%, SSA benefits will have nearly matched that, with a total increase of 23.4%.
How much is the Social Security increase for 2025?
The official announcement of the COLA for 2025 by the Social Security Administration will take place on October 10, 2024.
The Senior Citizens League and The Center for Retirement Research at Boston College both predict a 2.5% increase in the nonprofit sector in 2024, which is less than the 3.2% increase seen in 2024.
Since February 2021, the average prices have increased by only 2.5% according to the August 2024 Consumer Price Index report, which is lower than the post-pandemic highs recorded by the U.S. Bureau of Labor Statistics.
An average monthly Social Security benefit for retired workers would increase to $1,966 with a COLA of 2.5%.
In December, Social Security recipients will receive an official notice about their 2025 benefits. However, you can access that information online in mid-November through your mySocialSecurity account.
How is the Social Security COLA calculated?
The COLA is linked to the CPI-W, which measures the average prices of urban wage earners and clerical workers' household goods, such as food, housing, and transportation. The COLA for any given year is determined by the CPI-W in the third quarter of the previous year. The COLA for 2025 will be announced in October 2024, based on data from July to September.
Changes to Social Security in 2025
In order to receive Social Security retirement benefits, you need to accumulate 40 work credits throughout your life, with a maximum of four credits per year.
In 2024, earning four credits required making more than $6,920. This amount will increase in 2025, though the exact increase has not been announced yet. In 2023, the income minimum was $6,830, an increase of $90 from the previous year.
The income cap for the maximum annual earnings subject to the Social Security tax in 2024 is $168,600, which is an increase of $8,400 from the previous year.
How much is the average Social Security check?
The specific Social Security benefits you receive are determined by various factors, such as your earnings history and the age at which you begin receiving benefits.
In June 2024, the average monthly Social Security benefit for retired workers was $1,918. The average check for all recipients, including spouses, children, and disabled workers, was $1,781.
According to the SSA, half of seniors who receive Social Security count on their benefits for at least 50% of their household income, while a quarter rely on their check for at least 90% of their income.
Having an employer-sponsored 401(k) or an individual retirement account (IRA) can enhance your retirement comfort. Charles Schwab and Betterment were ranked among the top IRAs.
When will I see the increase in my Social Security check?
The COLA increase will be included in benefit checks for many recipients in January 2025, and the date when your check arrives will depend on your birthdate.
- If you were born between the 11th and last day of the month, you should see the increase in the check arriving on Jan. 8, 2025.
- If you were born between the 21st and 31st of the month, expect it on Jan. 15, 2025.
- If you were born between the 1st and the 20th of the month, your larger check will come on Jan. 22, 2025.
Some recipients will receive the increase sooner, however.
- If you've been receiving Social Security benefits since before May 1997, your first check of the year will arrive on January 3, 2025.
- SSI benefits are usually paid monthly, but since New Year's Day is a federal holiday, the checks will be issued on December 31, 2024.
The full calendar of Social Security payment dates is available online.
When can I start collecting Social Security?
If eligible workers choose to begin receiving Social Security benefits at age 62, they will receive a reduced monthly payment until they reach full retirement age.
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