The Social Security Administration (SSA) will announce the change to monthly payments for 2025 on October 10. This will be a big day for retirees and other people who get benefits from the SSA.
They will let beneficiaries know how much their payments will go up in the coming year. This change is part of the annual Cost of Living Adjustment (COLA), which is meant to keep retirees’ buying power in line with the rate of inflation.
The COLA is a way for retirees to keep up with rising costs, especially when prices are going up quickly. Over time, inflation makes money less valuable, which means that retirees would have a harder time paying their daily costs if their benefits did not go up.
As inflation has slowed down in recent months, most people think that the COLA rise for 2025 will be small, probably around 2%.
The latest economic trends and a drop in inflation rates are used to make this prediction. These factors have a direct effect on the size of the COLA.
To give you some background, the COLA for 2024 was set at 3.2% and began in January of that year. As a result, receivers got an extra $58 a month on average.
However, inflationary pressures have kept going after that change and caused prices to slowly rise. Prices will have gone up even more by the time the 2025 COLA is calculated, even though inflation has not been as strong as it has been in the past.
A measure from the Bureau of Labour Statistics (BLS) called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used by the SSA to figure out its annual COLA.
The CPI for September, which will be released soon by the BLS, is the last piece of information needed to figure out the 2025 COLA.
It is important to remember that for older people, costs tend to rise faster than for everyone else, especially when it comes to things like health care. Costs for retirees have gone up by about 3%, according to new figures.
Because of this, some groups, like the Senior Citizens League, think that the COLA for 2025 might be a little higher than most people think, maybe hitting 2.5%. Seniors might feel a little better about this possible raise, but it would still be less than last year’s COLA.
Strategies to improve retirees finances while dependent on Social Security
Since the expected rise for 2025 is not very big, retirees may need to think of other ways to protect their finances. If the economy is unstable, relying only on Social Security benefits might not be enough to keep up a decent standard of living.
Many experts in the field say that people who depend a lot on Social Security should think about trying to supplement their income with extra saves or investments they made while they were working.
This method might help make up for any shortfalls that come up in the future because of smaller COLA raises or higher costs.
For instance, experts say that one approach is to lock in bond interest rates before they might go down.
Retirees can make sure they have a steady stream of income even if market conditions change by spreading out the end dates of their fixed-income investments over a number of years.
This could help protect them from the risk of interest rates going down and give them a more stable way to make money on top of their Social Security payments.
Along with smart investments, careful planning is also important for retirees who want to be financially secure. People should think about their financial needs for the next few years and make a plan to make sure their income will be enough to cover them, say experts.
This means looking at current sources of income and deciding if they will be enough to cover rising costs like healthcare, inflation, and other things.
With a well-thought-out budget and some extra income ideas, retirees may be better prepared to handle tough economic times and keep up a decent standard of living.
Also see:-2025 SSI Increase – Social Security Makes New Check Amounts Official
