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How much will benefits increase?

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How much will benefits increase?

To keep up with inflation, the Social Security Administration (SSA) adjusts the amount recipients receive each year. The 2025 cost of living adjustment (COLA) will be announced on October 10, 2024.

The Social Security increase for 2024 was 3.2%, but with inflation cooling, analysts are predicting a smaller adjustment in the new year.

Nearly 68 million Americans received monthly Social Security benefits in 2024, totaling about $1.5 trillion.

According to an April Gallup poll, more than a third of retirees say their checks are an important source of income.

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What is the Social Security COLA?

Since 1975, the SSA has adjusted benefits at the beginning of each calendar year to keep pace with inflation. This annual increase is calculated based on changes in the Consumer Price Index for Urban Wage Earners and Office Workers (CPI-W).

Due to the post-pandemic surge in inflation, the COLA has been higher in recent years.

  • 2021: 1.3%
  • 2022: 5.9%
  • 2023: 8.7%
  • 2024: 3.2%

Sometimes benefits remain unchanged, although this is rare: since its inception in 1975, the COLA was just 0% in 2009, 2010, and 2015.

The adjustments are intended to help seniors keep up with rising prices. The consumer price index has increased by 24.6% since 2021. If the 2025 adjustment is 2.5%, SSA benefits will approximate that value with a cumulative increase of 23.4%.

How much is the Social Security increase for 2025?

The Social Security Administration will officially announce the 2025 COLA on October 10, 2024.

The non-profit The Senior Citizens League has predicted a 2.5% increase, as has the Center for Retirement Research at Boston College. If true, this represents a more modest increase than the 3.2% rise in 2024.

According to the US Bureau of Labor Statistics, inflation continues to fall from its post-pandemic highs: The August 2024 Consumer Price Index report showed a 2.5% increase in average prices since August 2023 – the smallest 12-month increase since February 2021 .

A 2.5% COLA would result in an average increase in monthly Social Security benefits of $48 and increase the average check for retired workers to $1,966.

Social Security recipients will receive an official notice of their 2025 benefits in the mail in December. However, you will be able to access this information online through your mySocialSecurity account beginning in mid-November.

How is Social Security COLA calculated?

The COLA is bound the Consumer Price Index for Urban Wage Earners and Office Workers (CPI-W), which the Bureau of Labor Statistics calculates based on the average prices of household goods such as food, housing, and transportation.

The COLA for a given year is determined by the CPI-W in the third quarter of the previous year. The 2025 COLA will be announced in October 2024, based on data from July to September.

Social Security Changes in 2025

To be eligible for Social Security retirement benefits, you must accumulate 40 work credits over your lifetime, with a maximum of four credits per year.

To earn four credits in 2024, one had to earn more than $6,920. This amount will increase in 2025, but how much will not be announced until October 10th. (The minimum income increased in 2024 increased by $90 from 2023, when it was $6,830.)

The maximum amount of annual income subject to social security contributions could also increase. The income cap for 2024 is $168,600, an increase of $8,400 from 2023.

How much is the average Social Security check?

Your specific Social Security benefits depend on a number of factors, including your income throughout your working years and the age at which you start receiving benefits.

As of June 2024, the average monthly Social Security benefit for retired workers was $1,918. For all recipients — including spouses, children and disabled workers — the average check was $1,781.

Half of seniors who receive Social Security count on their benefits to cover at least 50% of their household income. according to the SSA. A quarter rely on their check for at least 90% of their income.

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When will I see the increase in my Social Security check?

The 2025 COLA will appear in benefit checks for most recipients beginning in January 2025. When your check arrives depends on your date of birth.

  • If you were born between the first and 10th of the month, the increase in check should arrive on January 8, 2025.
  • If you were born between the 11th and 20th of the month, expect to be born on January 15, 2025.
  • If you were born between the 21st and the end of the month, you will receive your larger check on January 22nd, 2025.

However, some recipients will receive the increase sooner.

  • If you received Social Security benefits before May 1997, you will receive your first check of the year on January 3, 2025.
  • If you receive Supplemental Security Income (SSI), benefits are typically paid on the first of the month. However, since New Year's Day is a federal holiday, these checks will be issued on December 31, 2024.

The full calendar of Social Security payment dates can be found here available online.

When can I start receiving social security?

Eligible workers can begin receiving Social Security benefits at age 62. However, they will receive a lower monthly payment if they do not wait until full retirement age.

Year of birth Full Social Security retirement age
1943-1954 66
1955 66 and two months
1956 66 and four months
1957 66 and six months
1958 66 and eight months
1959 66 and 10 months
1960 or later 67

FAQs

What is the Social Security cost of living adjustment for 2025?

The 2025 COLA will be announced on October 10, 2024. The latest forecast from the Senior Citizens League is for a 2.5% increase.

At what age do you start receiving 100% of your Social Security?

Your full retirement age depends on your year of birth: If you were born in 1957 or earlier, you are already entitled to 100% of your Social Security benefits. Thereafter, it gradually increases to age 67 for anyone born in 1960 or later.

How is social security financed?

Social Security is funded by a special payroll tax of 12.4%, which is split between employees and employers on incomes up to $168,600. (Self-employed people pay the full amount.) The contributions collected are now used to finance the benefits of current recipients.

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