With 2025 approaching, the cost-of-living adjustment (COLA) gets closer by the day. The 2.5% increase will be applied to all Social Security benefits beginning January 1st, with one important exception.
According to the Social Security Administration (SSA), “the latest COLA is 2.5 percent for Social Security benefits and SSI payments.” Social Security benefits will increase by 2.5 percent beginning with the December 2024 benefits, which will be paid in January 2025.
Federal SSI payout levels will also increase by 2.5% beginning in January 2025. Because the regular SSI payment date is the first of the month and January 1 is a holiday, SSI payments for January are always made at the end of December.”
But first, what are the Social Security benefits? They are federal government benefits that are distributed by the Social Security Administration to persons who qualify due to retirement, disability, or other forms of financial difficulty. The Social Security Administration runs five benefit schemes, each with its unique set of characteristics and requirements:
- Disability Benefits: Monthly payments for those with a qualifying disability or blindness and sufficient work history.
- Survivor Benefits: Support for family members of a deceased worker who paid into Social Security, such as spouses, ex-spouses, children, or dependent parents.
- Family Benefits: Monthly payments to certain family members of people who are eligible for Retirement or Disability.
- Retirement Benefit: Monthly check that replaces part of your income when you reduce your hours or stop working altogether It is based on your work history.
- Supplemental Security Income (SSI): Monthly payments to people with disabilities and older adults who have little or no income or resources.
As an example of benefit distribution, the SSA’s Office of Retirement and Disability Policy reports that 70.6 million persons received Social Security payments in 2022, with 5.6 million new beneficiaries added that year.
The average age of disabled workers was 55.6, with women accounting for 55% of SSI recipients. Furthermore, 85% of SSI benefits went to people who were disabled or blind.
Changes to Social Security benefits
Because those who receive government assistance are more economically vulnerable than their well-paid salaried colleagues, improvements are made on an annual basis to guarantee that the benefits they get are sufficient to cover their expenses. One of the most significant adjustments is the previously mentioned COLA.
It ensures that beneficiaries maintain their purchasing power over time and can afford to live well. For those interested in learning how the rise will effect their benefits, the SSA sends out yearly mailings to beneficiaries outlining the specifics of their specific increase as well as the amount of their new check.
These warnings will be delivered in December, but those with a my Social Security Account will also be able to consult them online.
The information that will be available online is another shift to the SSA system, as many forms, particularly those connected to overpayments or that must accompany disability claims, will now be available online and no longer require signatures.
The final change we will consider includes Social Security, but it is not directly related to it. Many beneficiaries (in fact, the majority of them) are also enrolled in Medicare, and one of the modifications to the program is an increase in Part B rates.
Even though the change may appear minor, Part B premiums are deducted from Social Security checks before they reach the recipients’ bank accounts. The increase will be around $10, severely impacting the 2.5% growth.
To put that into context, the average retirement Social Security payment is $1,907, so the increase is approximately $47. If we eliminate the $10 that Medicare will take, retirees will only get $37 more per month.