The data for the 2025 COLA is now in, and the third quarter of the year is over. Now, everyone is talking about how this new increase will affect your life, your retirement benefits, and the future of the Social Security Administration’s (SSA) programs in 2025.
If you are eligible for these government benefits, read on to find out how much money each recipient will get and how it will change Social Security as a whole.
How wide is the impact of the COLA increase?
Before you can understand how much COLA has changed the way Social Security systems are set up, you need to know why it was created.
The main goal of COLA is to protect the set incomes of retirees and other people who receive Social Security from the effects of inflation. Inflation will slowly take away people’s ability to buy things if nothing is done about it.
Let us look at the main goal of Social Security, which is to keep people in America from being poor. In that case, it does not make sense for a benefit that works now to lose its value every year until it is no longer useful.
So, an adjustment is needed. Since 1975, the COLA has been described as a way to do this in a regular and consistent way. Up until that point, it was done case by case with permission from Congress.
Still, COLA has an effect on more than just the amount of money each person gets; it also affects other values that the Social Security Administration manages for each of their programs.
It changes things like the most a disabled person can earn and still keep their benefits (also called “Substantial Gainful Activity,” or SGA);
It also changes how much money, assets, and resources a person or family can have and still be eligible for Supplemental Security Income (SSI); it changes the most money that can be taxed; and it changes the value of each Social Security credit.
You can see that it covers more than just one part of how the Social Security systems work.
When can you expect COLA to come into effect?
Every October, COLA is calculated using data from the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) for the third quarter of the year (July, August, and September).
The data is combined and compared to the same data from the previous year. Most people do not know that the SSA will take some time to put into place after it is created.
It will be officially changed when the Supplemental Security Income (SSI) payout is paid out on December 31.
It will be changed again in January for the other programs. The SSA’s Fact Sheet says that the following amounts will be expected in Social Security benefits for January 2025:
| Category | Estimated Average Benefits for 2025 |
| Retired Workers | $1,976 |
| Widowed Mother and Two Children | $3,761 |
| Disabled Workers | $1,580 |
What else besides COLA may influence the outlook of Social Security next year?
As you know, Social Security is going to be changed in a number of ways after the elections on November 5th. The first is about whether the programs can be paid for and how the new government plans to deal with the threat of running out of money by 2035.
To solve this problem, we can either assume that more taxes will need to be paid to support the program, or we can change the main requirements an American must meet in order to retire.
For example, we could change how much he pays in Social Security taxes, the number of credits he needs to retire, or, most commonly, we could raise the FRA (Full Retirement Age).
As you can see, the government can change how it gets the money it needs to pay all retirees every month or slow down the rate at which new people join the pool of benefits.
Also see:-Total change in Social Security SSI checks – This is the most you’ll be able to earn in 2025
