The Social Security program is always changing to keep up with the times. The Cost of Living Adjustment (COLA) is one of the easiest ways for most people to see this change: their checks go up every year.
As with anything else in life, there is no guarantee of a raise because the COLA is based on inflation. Some years, inflation does not rise at all, but this happens so often that most people who get benefits have come to expect it.
This helps them keep up with inflation and keeps their benefits from going down in value over time. The COLA will be 2.5% in 2025, which is a lot less than the average 3.2% increase in 2024.
It is impossible to say if this benefit increase is enough or not without knowing more about the situation. However, the average Social Security check is a little over $1,900 a month, so the raise will be about $50 a month.
The extra money might not be enough to meet all the needs of the beneficiaries since the cost of living has gone up a lot in the last few years and Medicare Part B premiums will go up by about $10 per month.
People often think that benefits are meant to raise retirees’ standard of living, but they are actually just meant to keep it the same.
Similarly, the increase is not meant to help retirees save more money or get richer; it is just meant to help them pay for higher prices on things like food, gas, and other goods and services. The issue with this is that the rise does not go back in time and happens after inflation has been measured.
This means that some retirees will have had to use their funds to pay for living costs when inflation was higher, making their situation worse than it was before.
Still, the raise is set in stone, and people who will benefit from it will be told about it by mail starting in early December, before it goes into effect in January.
Other changes to the Social Security program
Also, the highest amount of money that is taxed will go up from $168,600 to $176,100 in 2025. This also means that the biggest amount of money you can get from Social Security will go up from $4,873 a month to $5,108 a month.
This will only affect a small group of beneficiaries, but all payments will go up by the 2.5% COLA that was set.
Not only will retirement benefits go up, but so will disability payments, survivor and family benefits, and Supplemental Security Income payments. All of these will go up by the same amount.
For some reason, people who get Supplemental Security Income should know that their first payment of 2025 will come early, on December 31, to account for the New Year holiday.
The payment will come in 2024, but the raise will already be taken out of the check, so the new amount will be what you see in your bank account.
The earnings test limit, is a limit that workers who also get Social Security payments must meet. The last big change will be to this limit.
Worker who has not yet reached full retirement age and worker who will reach full retirement age in 2025 each have their own limits.
- The most that workers under the “full” retiring age can earn will go up to $23,400.
- When people hit their “full” retirement age in 2025, they will be able to make up to $62,160 a year.
Before you start making plans for retirement, you should think about all of these important changes that will affect you.
Check out the SSA’s website if you have any questions about your benefits. They will have all the information you need right there.