Total change in social security from 2025

Social Security recipients will soon learn what their annual cost of living adjustment will be for 2025. You may be disappointed because if current forecasts are correct, this could be the smallest increase in benefits since 2021. According to a forecast last month by the independent Department of Social Security, security and Medicare expert Mary Johnson expects the Social Security cost of living adjustment (COLA) to be perhaps 2.5% in 2019. Johnson’s calculations show that with this change, the average retirement benefit would increase by $48 per month from $1,920.

On the other hand, this year’s payment increase for beneficiaries was 3.2%. Due to rising inflation, beneficiaries in 2023 and 2022 will receive the largest benefit increases in forty years, with COLAs of 8.7% and 5.9%, respectively. Additionally, Joe Elsasser, president of Covisum, a social security claims software company and certified financial advisor, noted that even though this is the case, many people are still suffering the aftereffects of rising costs 2025 COLA is expected to be lower than in previous years. This means that even with a small increase in benefits, existing income may not be enough to cover the cost of essentials.

Starting in January 2025, Social Security payments will change

The Senior Citizens League, a nonpartisan seniors organization, has also forecast a COLA of 2.5% for 2025. Alicia Munnell, director of Boston College’s Center for Retirement Research, has said the most recent data available suggests a 2.5% increase in benefits next year. According to the Senior Leaguethe average COLA for Social Security over the past 20 years has been about 2.6 percent. Based on Johnson’s calculations from last month, the current 2.5 percent forecast has about a 17% chance of an increase and a 13% chance of a decrease.

The official Social Security cost of living adjustment will take another month’s worth of government inflation statistics into account. That data, the consumer price index, will also be available on Thursday. Normally the COLA increase is determined using the Consumer price index for urban wage earners and office workersalso known as CPI-W, is a subset of the overall consumer price index. To understand how the COLA is calculated, consider that the CPI-W data from the third quarter of last year is compared to the third quarter of this year. Therefore, the COLA is calculated as a percentage increase from the previous year to the current year.

While hurricanes can impact the calculations, Johnson believes the impact of Hurricane Helene, which made landfall on the evening of Sept. 26, came too late to be included in the September data. Although gas prices have fallen over the last month, she suggested that may not have been significant enough to change the COLA calculation. Despite recent hurricanes like Helene and Milton, the Bureau of Labor Statistics Last week, on October 10, the company finally announced the official 2.5% COLA increase for 2025. Based on this percentage, the Social Security Administration calculates the new Social Security payments for the next year.

When does the 2.5% COLA increase take effect?

Although the new cost of living adjustment has already been announced, beneficiaries from the Old Age, Survivors and Disability Insurance (RSDI) and Supplemental Security Income (SSI) programs will not see their respective increases until January 2025. Perhaps the only retirees who will receive their increased checks starting December 31 of this year will be SSI recipients. The reason for this is that the SSI program always delivers its payment on the first day of the month and since January 1st falls on a holiday, the SSA will move that day to the previous business day. Below are the approved payment amounts that beneficiaries will receive based on the new 2025 COLA.