When the SSA announced the 2025 cost-of-living adjustment (COLA) on October 10, many people were worried about how their checks and quality of life would be affected by an adjustment that was less than expected.
Many people, both experts and people who would benefit, were surprised by the 2.5% change. They thought that inflation wouldn’t have slowed down as much as it did, but that it would before the end of the year so that the increase could make up for the unstable economy in 2024.
Even though there were problems, the pay raise was announced. Now it’s time to look at the budget and see how much of the extra money will be needed to cover the costs.
How far will your Social Security check go with the new COLA?
It’s impossible to know how the increase will affect everyone because everyone’s journey and Social Security check is different. However, it is good to know that all checks will go up by the same percentage, no matter what kind of benefit is received. Of course, that includes benefits for retirement.
The SSA does provide some information that can help people get a rough idea of how the increase will affect their finances. However, if you want to know exactly how much your benefit will go up because of the new COLA, all you have to do is multiply your current benefit by the 2.5% increase.
In 2024, the average monthly Social Security check for retired workers will be about $1,920. This number changes a little as new retirees add their amount to the mix or as people die and take out their check.
There isn’t a big difference, but every month there is a change of a few dollars. This means that if we apply the COLA, we will get an extra $48.
Those who get more than this average will see their pay go up more, but those who don’t get that much will see their pay go up a lot less.
What if the COLA isn’t enough?
A lot of Medicare recipients, especially those who are retired, are wondering the same thing now that they know their Part B premiums will go up by about $10 a month in the new year. That would mean the average hell wouldn’t really go up by $48 but only by $38.
Also, just because inflation has slowed down doesn’t mean that prices have too. It just means that prices should stop going up so quickly.
Many people on fixed incomes have had a hard time paying their bills and have had to use their already small savings. Changing the way the COLA is calculated from the CPI-W to the CPI-E would be the best solution for everyone.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is more focused on the lives of young professionals in cities.
The CPI-E, on the other hand, is a weighted average of price changes for the same data but is more focused on the needs of people aged 62 and up. This can’t be the answer since the index isn’t going to change any time soon.
So, what other options do retirees have to make more money? You could use your savings or retirement accounts, but that’s not a great idea. People say that you can’t take it with you, but it’s good to have a safety net, and many beneficiaries are already short on cash.
Going back to work is not the best option, but a part-time job that can help with money, health insurance, social interaction, and many other benefits could be a good choice for healthy people who are willing to do it.
When will the increase be added to the checks?
The first check that will have the increase added to it is for Supplemental Security Income. It will be sent out on December 31 because January 1 is a holiday.
The rest of the payments will be sent out as planned:
- January 3rd If you received Social Security before May 1997 or if receiving both Social Security and SSI, Social Security is paid on the 3rd and SSI on the 1st.
- January 8th payments for those born between the 1st and the 10th of every month
- January 15 payments for those born between the 11th and the 20th of every month
- January 22nd payments for those born between the 21st and the 31st of every month
