MJP –
Today, Social Security benefits are collected monthly by millions of seniors. The bulk, if not all, of retirement costs are covered by such benefits for many people.
The extreme inflation of recent years has made it very difficult to get by just on Social Security. Fortunately, prices are beginning to stabilize and inflation is beginning to fall, which has led the Federal Reserve to discuss interest rate cuts.
While a slower inflation rate is great news for Social Security retirees, it may lead to a less-than-desirable cost-of-living adjustment (COLA) in 2025.
If you’re interested in knowing the amount of next year’s Social Security boost, you should note October 10th on your calendar. Official word on the 2025 COLA is expected from the Social Security Administration (SSA) around that time.
However, you should also be ready for the reality that, unless a sudden change in inflation in September, the Social Security COLA for next year would most likely be lower than the one for 2024.
Our current understanding of the Social Security COLA for 2025 Thus far
We don’t have an official number just yet because Social Security COLAs are dependent on third-quarter inflation data. The Consumer Price Index number for September is not available until October 10th, so we will have to wait.
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There are, however, projections for the Social Security COLA for next year that are based on current inflation statistics. A cost-of-living adjustment (COLA) of 2.57% is projected for 2025 by the nonpartisan organization TSCL. Compared to the 3.2% increase that Social Security recipients got in January, that is a significant decrease.
Inflation, however, was stronger in late 2023 compared to the preceding months. Consequently, a lesser COLA in 2025 is both understandable and unfortunate.
There is, of course, wriggle space for that 2.57% prediction in light of forthcoming inflation data. That figure, however, is more likely to go down than up, given the current trajectory.
On October 10th, you will be able to find out about your 2025 COLA by visiting the SSA’s website. Other revised figures, such as the earnings-test limit for 2025, the maximum monthly benefit, and the wage cap for Social Security tax purposes, should also be released by the SSA at that time.
Before the new year begins, make plans to address any concerns you may have about 2025’s COLA. In particular, you should evaluate your expenditure to identify potential areas of savings if you anticipate having trouble paying your bills in 2025. To get more out of your benefits, you might want to think about moving to a cheaper area.
Another great way to save money is to downsize if you have a larger home that requires a lot of maintenance.
And if you’re already cutting corners wherever you can and still aren’t sure moving is in your future, consider taking up some freelance work here and there. You might more than compensate for a reduced Social Security COLA with an additional $100 to $200 per month in income.
You won’t have to wait much longer to find out how much your Social Security increase will be in 2025. However, you should probably be ready for a lower figure than what you’ve witnessed in the past few years.
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