The 2025 cost-of-living adjustment (COLA) will be put out by the Social Security Administration (SSA) on October 10, 2024. We can only guess what the numbers will be until we get the data from September and can analyse it.
But even without the full picture, the data we have now points to a smaller COLA than in recent years. This may be disappointing for retirees who are already having a hard time with rising costs and few ways to make money in retirement.
All Social Security recipients will see their income go up by the same amount when the COLA starts to work. The real dollar increase will be different for each person, though, because their base benefit amounts are different.
When people retired in August 2024, the average Social Security income they got was $1,920 a month. If your benefits are higher than this amount now, the 2025 COLA will give you a dollar raise that is above the norm.
The Senior Citizens League, a neutral group that fights for the rights of seniors, says that the 2025 COLA will probably be around 2.5%. If this guess is right, the monthly benefit would go up from about $1,920 to about $1,968, which is a $48 raise.
This means that if the COLA stays at or above this predicted level, you could get an extra $48 every month if your current benefit amount is more than the average of $1,920.
If you want a rough idea of how much money you will get in the future, you can figure out the expected 2.5% rise in your current payment. Just keep in mind that this is just a guess; the actual COLA will be announced on October 10.
What will happen if the COLA is not high enough to cover the increase in expenses
There is a chance that the 2025 COLA will not be enough to make up for the rise in living costs that many seniors have seen in the past year.
Many people think this is because of the way the government figures out COLAs; it might not fully reflect the costs that seniors really face.
There have been several attempts to switch from the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E).
Both the CPI-W and the CPI-E are ways to measure inflation, but they do so in different ways. The CPI-W looks at spending habits of women, while the CPI-E looks at spending habits of men.
The CPI-W shows how wage earners and office workers in cities spend their money, so it is a better indicator of younger, working-class households.
On the other hand, the CPI-E is meant to show how Americans aged 62 and up spend their money, with a focus on costs like housing and healthcare that are more important for older people.
Because of this, CPI-E usually shows a slightly higher rate of inflation than CPI-W. This is because older people spend more of their income on services that are getting more expensive, like medical care.
These differences affect policies like Social Security cost-of-living adjustments, which have usually used CPI-W, even though some say that CPI-E might better represent the needs of older beneficiaries.
The government is the only one who can change the way the calculations are done, so seniors have to find other ways to make up for lost income.
Possible solutions
If you have savings, they can come in handy. Unfortunately, a lot of people do not have enough saved for retirement, so they have to find other ways to make money.
Going back to work might not be the best idea, but it can provide a steady source of income. It is important to note that retirees can try new roles that are different from their previous jobs.
They often look for more flexible jobs that fit their hobbies. Part-time jobs and jobs that can be done from home are becoming more common, which lets retirees boost their Social Security benefits and savings without having to commit to full-time work.
There are also chances that you could be qualified for other government programs that help with things like housing, utilities, food, and medical bills.
Because getting into these programs and being approved can take time, you should apply as soon as you think you might need help in 2025.
As soon as the 2025 Social Security COLA is made public, if you have not already, you should go over your financial plans for the next year again.
By making a thorough budget before January, you will know exactly how much you can take out of your savings, how much you will get in benefits, and how much extra money you may need to reach your financial goals.
Also see:-Social Security checks will be cut by 21% – How much money retirees will lose
