The 2024 COLA is history: Social Security will change everything after this date

He cost of living adjustment (COLA) The year 2024 will soon be history, as the Bureau of Labor Statistics will announce the new COLA increase for the following year. If Social Security provides more than half of your retirement income, you may want to know how much of an increase you’ll receive in 2025. Unfortunately, you’ll have to wait a little longer. Beneficiaries should be aware that the Social Security Administration won’t be able to formally release the Social Security cost-of-living adjustment, or COLA, for 2025 until October 10. This is because it uses the third-quarter inflation data used to generate those COLAs. Also, since the third quarter of the year is still ongoing, it’s premature to draw conclusions with 100% accuracy.

Social Security will change after the announcement of the new COLA in October

Based on currently available inflation readings, projections are available for next year. Social Security Cost of Living AdjustmentAdditionally, the most recent estimate puts the increase for 2025 at 2.5 percent. Not only is a 2.5% increase the smallest COLA announced since 2021, it’s also pretty moderate to begin with. Since inflation began to skyrocket in 2021, Social Security retirees have been receiving really large COLAs, so a 2.5% increase may seem even smaller. While the possibility of your COLA peaking at 2.5% in 2025 may not cheer you up, there is a silver lining you should be aware of. Changes in the Consumer Price Index for Clerical and Salaried Employees from year to year serve as the basis for Social Security COLAs.

Social Security benefits typically increase substantially when inflation rises. Benefits increase less when inflation slows. By 2025, seniors are looking at the latter scenario. There is, however, a small silver lining to a 2.5% Social Security COLA: It means the cost of living isn’t rising as fast as it once was. But here’s another way to look at it. Social Security Benefits It may have increased significantly over the past few years. However, you’ve probably also factored in rising costs at the pharmacy, the grocery store, and pretty much everywhere else. As inflation begins to slow, you may find that you’re spending less on these and other necessities, but over time it should even out.

Should beneficiaries have alternative sources of income besides Social Security payments?

Without savings and relying solely on Social Security benefits to pay their bills, many seniors may be worried about a small cost of living adjustment (COLA) by 2025. But living like that is scary. If you’re retired and find yourself in this situation, taking advantage of gig economy opportunities can be a great way to boost your take-home pay and build an emergency fund. That way, you have a safety net in case of unexpected expenses or sharp increases in inflation before your Social Security benefits have a chance to adjust.

Still, if you’re not yet retired, take note of the anxiety older people feel about their Social Security cost-of-living adjustments. You don’t want to find yourself in a situation where you have to rely on an annual benefit increase to get by. Instead, make the most of your working years to save so you can comfortably increase your income. Social security incomeYou won’t have to spend a significant portion of your retirement years worrying about cost-of-living adjustments next year if you end up with a respectable savings account.

How can the 2025 COLA affect Social Security benefits?

As October approaches, millions of retirees are still waiting for the official launch of the… cost of living adjustmentas it will determine how much money they will receive starting in January. According to the latest projections, the 2025 COLA could be around 2.57%, which is lower than the current increase of 3.2%. If this percentage goes into effect, here is how Social Security benefits will increase for retirees starting in January 2025: