Millions of seniors today rely on their monthly Social Security benefits to make ends meet. For someone who doesn’t have a lot of savings, a generous Social Security cost-of-living adjustment (COLA) can make the difference between being able to manage expenses in the new year or falling behind.
To date, we have not yet received official notice of a Social Security COLA for 2025. That information will not be released for several weeks, but it is important to know when that announcement is scheduled so you can plan accordingly.
Get ready for a big announcement in October
The Social Security Administration (SSA) will announce the official COLA for 2025 on October 10. The reason retirees have to wait so long is because the COLAs are based on third-quarter inflation data, which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
We already have CPI-W readings for July and August. However, September readings will not be available until October 10 – hence the delay.
Next year’s COLA could disappoint – but it’s not all bad news
Initial estimates suggest that social security contributions will be 2.5% in 2025. This is significantly less than the 3.2% that pensioners received at the beginning of 2024.
It’s worth noting, however, that a 2.5% Social Security COLA is also a bright spot — it’s a sign that inflation is cooling. While Social Security benefits may not increase as much as retirees would like in the new year, these recipients could enjoy some major relief in the form of cheaper groceries, utilities, and other bills. All in all, things could even out quite nicely.
That means that even if an official announcement of Social Security retirement contributions is made, retirees cannot expect an increase in their personal monthly benefits until Medicare announces what the standard Part B premium will be in 2025. Retirees who are enrolled in both Social Security and Medicare will have their Part B contributions deducted from their monthly benefits. A large increase in Part B could eat into future retirement contributions.
Prepare for changes
A smaller Social Security COLA for 2025 may not hit retirees as hard as expected thanks to easing inflation. But it’s not a bad idea to make changes in anticipation of a more modest increase.
If you’re struggling to cover living expenses, consider working in some form or reducing your expenses. Getting a part-time job might not allow you to get rid of your car. But if you’d rather not work, you might be able to get by without a car, which could save you a lot of money and increase your 2025 COLA even further.
Learn more about next year’s COLA
On October 10, the SSA’s news section might be an interesting place to visit. Information about next year’s COLA should be available at that time, as well as other aspects of the program, including the Social Security income limit, the wage cap for Social Security taxes, and the program’s maximum monthly benefit.
The $22,924 Social security bonus that most pensioners completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help boost your retirement income. For example: One simple trick could earn you up to $.22,924 more… every year! Once you know how to maximize your Social Security benefits, we believe you can retire with the security we all seek. Just click here to learn more about these strategies.
Watch the “Secrets of Social Security” »
The Motley Fool has a disclosure policy.
This is exactly when the 2025 Social Security COLA will be announced and what it means for retirees was originally published by The Motley Fool
