The Social Security Administration (SSA) said that Social Security payments will be changed before the end of the year. This is because of the yearly Cost of Living Adjustment (COLA).
For the millions of people who depend on Social Security benefits, these changes can have a big effect on their monthly income, helping them keep up with the rising costs of basic goods and services.
This is why the SSA makes this announcement every year: they want to make sure the benefits keep working and keeping up with inflation.
Social Security is a government program that helps people with money when they need it, like when they retire, become disabled, or lose a family member.
Because the program is so important for helping people who may not have a regular income from work, it is very important that the benefits change as the economy does.
The COLA is what makes these changes possible. Its goal is to make sure that Social Security payments are in line with the current economy so that recipients do not lose buying power as the cost of living rises.
Calculation of the COLA for Social Security benefits
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to figure out COLA.
It is the Social Security Administration’s job to compare the CPI-W statistics from the third quarter of last year (July, August, and September) with the same quarter of this year.
The increase in percentage between the two times is then used to figure out the change that will be made to the next year’s Social Security benefits.
If the prices of goods and services go up, the COLA will also go up, which means that Social Security funds will go up as well.
Implementation of the COLA Adjustment
Once the Social Security Administration (SSA) figures out the correct COLA for the year, this new percentage is added to everyone’s payments.
The change also affects other figures related to Social Security, like the maximum amount of money that beneficiaries can earn while working and the number of work credits that beneficiaries must earn before they can start receiving future benefits.
The Senior Citizens League, a nonpartisan advocacy group that works to improve the lives of seniors, thinks that the COLA will lead to a rise of between 2.57 and 2.63 percent next year.
Even though this raise will make monthly checks a little bigger, it is important to remember that a higher COLA usually means that prices will be going up.
Thus, even though beneficiaries will get more money, the rising prices of goods and services may cancel out the extra money they receive, making it less likely that their total purchasing power will improve significantly.
Estimated Changes to Social Security Benefits for 2025
Here are some ways that Social Security payouts might be different in 2025 if the new COLA is put in place:
Benefits for retirement:
The average retirement income is $1,871.09 right now, and it will likely go up to around $1,920 after the COLA adjustment. The most that people can get when they retire at age 62 is $2,710 right now.
Based on the expected COLA, this could go up to about $2,781. People who leave at age 67, which is the full retirement age for many recipients, get the most money right now ($3,822). After the change, this is expected to go up to about $3,923.
Lastly, people who wait to retire until they are 70 years old can get a maximum of $4,873 a month. This amount is expected to go up to $5,000 after the COLA is taken into account.
Get help for a disability:
The current average disability benefit is $1,401.30, but it will likely go up to around $1,438 after the COLA. The highest disability benefit, which is currently $3,822, will also likely go up to $3,923.
Benefits for Survivors:
The average amount of survivor payments right now is $1,509.50. This will likely go up to about $1,549 with the COLA.
Extra Help with the Needs (SSI):
Right now, the average SSI payment is $695.84. After the COLA is added, it will probably go up to around $714. The current maximum benefit for a single SSI recipient is $943, and it will likely go up to $968 with the COLA.
The current maximum benefit for a couple is $1,415, and it will likely go up to $1,452 with the COLA. The current maximum benefit for an essential person is $472. This is someone who lives with and takes care of an SSI recipient. After the adjustment, this benefit is projected to go up to $497.
Also see:-If you were born this year, you will get your last September Social Security payout this week
