Social Security Increase For 2025 Chart

Social Security Increase For 2025 Chart

After a 3.2% increase this year, the Social Security cost-of-living adjustment might reach 3% in 2025. An impartial expert on Medicare and Social Security, Mary Johnson, made that prediction.

The annual bonus from Social Security is $16,728; have you heard about it? Retirees cannot obtain a “bonus” in reality. Your benefit amount is determined by the Social Security Administration (SSA) using a precise formula that takes into account your lifetime earnings.

March COLA projections from Johnson were 2.4%. For 2025 COLA, the official announcement is made in October.

According to the Senior Citizens League, the average cost-of-living adjustment (COLA) during the past 20 years has been approximately 2.6%. Even though it is not a raise, the approximately 67 million people who receive Social Security benefits can nevertheless get an increase from the cost-of-living adjustment (COLA).

If no action is taken to strengthen the Social Security and Medicare Trust Fund, it will become insolvent in approximately ten years, resulting in a 23% reduction in income for present and future beneficiaries.

After the consumer price index report for March revealed the biggest 12-month rise in consumer prices since September, the COLA projection was released. Social Security recipients will receive a COLA of 3.2% in 2024, which is more than the 3.5% increase shown in the CPI-W, the same index utilized to compute the COLA. Johnson added that this indicates that purchasing power is declining among elderly consumers.

This rise is attributable to the 3.5% reading for the Urban Wage Earners and Clerical Workers Consumer Price Index for March.

The cost-of-living adjustment for 2024 was 3.2%, which was much lower than the 8.7% in 2023. An increase of almost $50 per month was indicated by last year’s rise.

Director Shannon Benton, who assesses the Social Security COLA for TSCL, said that the most recent projection comes as expenditures for seniors continue to rise.

An increase of 2.6% in the COLA would result in a roughly $45 hike. So, what’s the deal with that? “Very little,” Benton remarked.

Despite receiving a 3.2% raise, 71% of respondents to a TSCL study said their living expenses increased at a faster rate. Of those who reported having to use their emergency funds, 53% cited food costs as the highest, with 61% citing this as the most significant rise.

The most recent CPI data is used to update COLA estimates monthly. Since it is calculated by comparing the average inflation rate during the third quarter (July, August, and September) to the same period a year ago, the final amount for 2025 is likely to deviate from the estimates.

Methodology for determining the cost-of-living adjustment for Social Security benefits

To calculate cost-of-living adjustments (COLAs), the Social Security Act mandates the use of the consumer price index. However, there are a number of different CPIs to choose from.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is the primary indicator used to calculate the Social Security COLA, as previously stated. The federal Bureau of Labor Statistics determines this index on a monthly basis. To calculate the cost-of-living adjustment for the following year, the Social Security COLA looks at the CPI-W rate in the third quarter, which ends on September 30.

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