Social Security Announces 2.5 Percent Benefit Increase for 2025

Submitted by rtg on Tue, 10/15/2024 - 11:21

If you’re receiving Social Security benefits the amount of benefits that you receive will go up starting on January 1st, 2025. The Social Security Administration has announced there will be a cost-of-living adjustment to benefits starting in 2025. The additional money that you receive from the Social Security benefit increase in 2025 is meant to help pay for housing, food, utilities, and other essentials that have gotten more expensive over the last year.

Social Security Announces 2.5% Benefit Increase for 2025

If you’re getting any kind of benefits from the Social Security Administration, you will get more money every month soon. The Social Security Administration announced that there will be a 2.5% cost-of-living adjustment that will increase benefits starting on January 1st, 2025.

Cost-of-living adjustments are meant to help you stretch your Social Security benefits further. The COLA 2025 is lower than the COLA from past years, but it will help make it easier to afford essentials that have gone up in cost.

Everyone who is currently receiving Social Security benefits will receive a letter in December that says what their new benefit amount will be after the Social Security COLA increase kicks in. You can also check your MySSA account on the SSA’s website starting November 20th to see what your new benefit amount will be when the 2025 Social Security benefit increase begins.

What Does the 2.5% Increase Mean for Social Security Recipients?

The 2025 Social Security benefit increase is 2.5% across the board. That means everyone who receives a payment from the Social Security Administration each month will see their benefit amount increase by 2.5%.

Why does Social Security increase yearly?

The Social Security Administration typically increases the amount of benefits that people receive once a year to help cover additional costs. Every year the prices of things like rent, utilities, and food go up because of inflation and other factors. The SSA’s cost-of-living adjustment is supposed to help people who are receiving benefits pay the increased costs for the things they need.

How Is Social Security COLA Calculated?

A benefit increase of 2.5% may not sound like much, but it can make a big difference when you’re trying to make those benefit dollars stretch throughout the month. For example, someone receiving the average Social Security benefit payment of 1,783.55 would see their payment increase by $44.59 after the 2025 Social Security benefit increase kicks in.

Understanding the Annual Cost-of-Living Adjustment (COLA)

The Social Security Administration uses a cost-of-living adjustment or COLA to make sure that the amount of benefits people receive is enough to pay for their monthly expenses. The cost of food, utilities, and other necessities go up every year because of inflation and market fluctuations, which means that the amount of benefits people get needs to go up too, or else people won’t be able to afford essentials.

In order to figure out how much of an increase in benefits is necessary to cover the increased costs of living the SSA uses a formula to calculate the annual COLA. The formula is based on the CPI-W, which measures changes in the prices of a basket of goods and services typically purchased by urban wage earners. The CPI-Q is calculated by the Bureau of Labor Statistics.

The SSA looks at the CPI-W for the third quarter (July, August, September) of the current year compared to the same months in the previous year. If there is an increase in the CPI-W, a COLA is applied to Social Security benefits at the start of the new year. The increase is calculated as a percentage of the benefits based on the rise in the CPI-W.

In 2023 the COLA increase was a huge 8.7% to help people keep up with pandemic price increases. But the 2024 Social Security COLA was a more moderate 3.2%. The 2025 Social Security COLA will be 2.5%, which should mean an increase of between $40-50 for most people receiving Social Security benefits.

Impact of the 2025 Social Security Increase on Retirees

The Social Security increase impact on retirees will be moderate. Retirees who are receiving their Social Security retirement benefits will see a slight increase in their monthly benefit amount in 2025. Everyone who is receiving benefits from the Social Security Administration including retirees, disabled individuals, and survivors who receive survivor’s benefits from the SSA will notice an increase in their benefit amount starting January 1st, 2025.

Knowing in advance that your Social Security benefit amount in 2025 will increase will make it easier to budget your money, plan any purchases, and make sure that your bills on paid on time to maintain good credit.

How to Find Out How Much Your 2025 Social Security Benefits Will Increase

Most people who receive the 2025 Social Security benefit increase will see their benefit amount increase by between $40-50. However, you can find out exactly how much of an increase you will receive by checking your MySSA account on the SSA’s website. Official increase notices will be available in your MySSA account starting on November 20th.

You will also receive a letter in the mail starting in December that will tell you exactly what your new benefit amount will be starting with your January 2025 Social Security benefit payment.

Make sure that you check your MySSA account and your benefit statement often to see what your adjusted payment amount will be. You can also call or email the SSA if you have a question about your specific benefit amount.

FAQs About the 2025 Social Security Benefit Increase

When will the 2025 increase take effect?

The Social Security cost-of-living adjustment will take effect January 1st, 2025. That means you should see an increase in your January 2025 Social Security benefit payment. The rest of your payments in 2025 will be the increased amount also.

How much will the average recipient receive?

Everyone who receives Social Security benefits will see a 2.5% increase in their benefit payment. For most people that means they will receive between $40-50 more per month than they received in 2024.

Will taxes affect the increase?

The Social Security COLA increase by itself is not taxed. But, if you are paying taxes on your Social Security benefits the taxes you pay will be based on the increased amount of your benefit.

Preparing for the 2025 Social Security Increase

If you’ve been having a hard time making ends meet with the amount of Social Security benefits that you’re receiving now the extra money that you will receive starting in January 2025 should make it easier to pay your bills.

The Social Security Administration will be increasing all benefit payments by 2.5% starting January 1st, 2025 as a cost-of-living-adjustment. You should start planning for that increase now so that you can make the most of your benefits and make them stretch further. Stay informed about changes to your Social Security benefits and check your MySSA account frequently so that you will know if there are any changes to Social Security benefits that will affect your payments.