The increase in Social Security payments is an event that recipients look forward to every year.
Since most people live on a fixed income (which doesn’t mean it doesn’t go up; it just goes up from a base amount that doesn’t change, unlike salaries, which can grow very quickly), any rise is seen as good news, especially in years like this one when people are still dealing with high inflation and the effects of the pandemic.
Because inflation rose faster than the Cost of Living Adjustment (COLA) in the first half of 2024, it is easy to see why many retirees were skeptical about the 2025 adjustment. Those who said it would be low were unfortunately right; on October 10, it was announced to be 2.5%, and that number will not change.
Experts don’t agree on whether this is a good or bad thing, but a lower COLA means lower inflation data, and a higher COLA would give the economy some breathing room as long as it doesn’t go up again in the new year.
What everyone can agree on is that this increase will either make pensioners’ benefits go further or stay the same.
Data from the Social Security Administration show that in 2024, the average couple getting Social Security benefits earns $3,014 a month, or more than $36,000 a year. This isn’t a bad number, but it’s not enough to cover most people’s costs.
But then, Social Security benefits were only meant to cover about 40% of costs in retirement; a pension or retirement account was supposed to cover the rest.
The Social Security COLA increase
Based on the 2.5% increase, the average retired couple getting a $3,014 monthly Social Security benefit in 2024 will see a $75 increase in 2025, bringing the total amount in their checks to $3,089. That would be an extra $900 a year, but it might not be enough to cover rising costs.
The cost-of-living adjustment (COLA) is a percentage of your current benefit. To get an idea of what your new benefit will be, multiply the amount you get in 2024 by 2.5%. If you want to be sure of your math, you can get an official COLA notice in the mail or online in your Social Security account in December.
The increase will show up on your check in January 2025. The exact date of your payment is based on the month you were born:
- Born between the 1st and the 10th: Jan. 8, 2025
- Born between the 11th and the 20th: Jan. 15, 2025
- Born between the 21st and the 31st: Jan. 22, 2025
What if the COLA isn’t enough?
The truth is that this increase won’t cover all of the extra costs that 2024 has brought for many families, and it hasn’t for a long time. The Senior Citizens League (TSCL) says that benefits have lost about 20% of their purchasing power since 2010, and they don’t think they’ll get back to where they were any time soon.
This is because COLAs are calculated using the wrong CPI for seniors, and lawmakers have not agreed to any plans to fix the problem. For their calculations, they don’t use the CPI-E, which is more focused on healthcare and other issues that affect seniors, but instead they use the CPI-W, which is for wage earners and clerical workers in cities.
There are a few things that retirees can do to make more money or save more money while they are retired.
- Reducing spending when possible
- Working part- or full-time to supplement your checks
- Delaying retirement, if you’re still working
- Exploring government assistance programs
