After months of waiting, the Social Security Administration has announced that there will be a 2.5% cost-of-living adjustment in January 2025.
All monthly Social Security payments for seniors, survivors, disabled people, and SSI recipients who are currently eligible will go up by this amount every year. After three years of this, seniors are used to getting huge raises.
These were 5.9%, 8.7%, and 3.2% in 2022, 2023, and 2024, respectively. It is true that the official COLA for 2025 is smaller than in previous years, but many retirees may still benefit from this because lower inflation also means lower cost of living adjustments.
Social Security confirmed the official retiree paycheck increase for 2025
The annual cost-of-living increase for Social Security is meant to make sure that payments keep up with inflation.
The Social Security Administration uses a part of the Consumer Price Index called the CPI-W to figure out how much a basket of goods and services that a wage or income earner in a city usually spends is worth.
The SSA specifically looks at the difference between the growth in the CPI-W during the third quarter of this year and the same time last year.
For the next year, that increase will be the cost of living adjustment (COLA). The SSA will get the CPI-W figures for September on October 10 and then the COLA for 2025 will be fixed.
A lot of people say that the CPI-W does not really show how much most seniors spend. It seems like the COLA does not keep up with the amount of money that seniors spend every year on goods and services.
In fact, the Bureau of Labor Statistics created a new subset of the CPI called CPI-E. It figures out how much a basket of goods costs by looking at how Americans aged 62 and up usually spend their money.
These are the households that will be touched by the Social Security COLA the most.
Some people have said that many retired families will be able to keep up their standard of living if the COLA is changed to the CPI-E or another measure that better shows how much seniors actually spend.
The Senior Citizens League says that the average Social Security recipient who started getting payments in 2010 has seen their buying power drop by 20% since they got their first payment.
As it turns out, a smaller COLA could actually help a lot of seniors. This is because COLAs are based on a measure of inflation, even if it may be the wrong one.
A lower Social Security increase could also be a surprising benefit
At the moment, a lot of seniors do not just depend on Social Security to pay for their retirement. In their 401(k), taxable investment accounts, and retirement accounts, they saved money and put it to work.
Last year’s Federal Reserve Survey of Consumer Finances found that by the end of 2022, the average household with a person aged 62 or older who had saved and invested during their work had $200,000 spread out among brokerage and retirement accounts.
Based on how the stock market has done since then, those amounts have probably gone up a lot. Those purchases do not get any changes for the rising cost of living.
They have to deal with market forces. If everything else stays the same, those savings accounts have more value when inflation is low.
When inflation is low, the Social Security COLA goes down, but it should still be able to buy things in theory. It might be better for retirees who have saved a lot of money for their golden years if the COLA is lower in 2025.
You will be able to buy more things in the future if the COLA stays low. In the past, gradual and steady inflation has usually been better for the purchasing power of Social Security checks, even if you count on them a lot.
The Senior Citizens League found that Social Security’s buying power had gone up in most years since 2010, when the COLA was less than 3%.
If the Federal Reserve sticks to its goal of 2% annual inflation, buying power should rise in 2019. This is true even if prices go up by 2.5%.
Also see:-Social Security check increases How COLA 2025 affects retirees in different groups
The government took most of our increase and they hide it from us like we are stupid!
Have the government pay back what they took from us for years!
NO ONE IS STUPID NOT TO KNOW THE GOVERNMENT HAS TAKEN WHAT IS RIGHTFULLY OUR MONEY TO FILL THEIR BANK ACCOUNTS, NOT GIVING A DAMN ABOUT THE PEOPLE WHO WORKED FOR THAT MONEY, AND NOW STILL CAN’T GIVE US WHAT IS RIGHTFULLY OURS!
GOD DON’T LOVE THE UGLY!