The cost-of-living adjustment (COLA) for 2025 is getting more and more attention, and everyone wants to know how it will affect their benefits. Even though the Social Security Administration won’t make an official announcement until October, we can still talk about how this change might affect retired workers and people who get spousal payments.
Projections
We won’t know the exact percentage of the Social Security COLA until later in the year because it is based on inflation figures from the third quarter. But because inflation is going down, experts think that the COLA in 2025 will be less than the 3.2% rise in 2024 and a lot less than the 8.7% rise in 2022, which was caused by high inflation. The Senior Citizens League says that the rate might go up by 2.63 percent in 2025.
Impact
People who are retired or getting spousal payments will both get more money from Social Security. Even though the average spousal benefit is less than the average retirement benefit, spouses still get the same percentage increase from COLA. This means that their dollar amounts grow less.
Take the case of a retired worker who gets $1,918 a month as of June 2024. With an expected COLA of 2.63%, their monthly check would go up by about $50. The raise would be about $24 for people who get spousal benefits, which are $911 a month on average. When one person gets retirement benefits and the other gets spousal benefits, the total amount of money each month will go up by about $74.
| Benefit Type | Average Monthly Benefit | Projected 2.63% Increase |
|---|---|---|
| Retired Worker | $1,918 | $50 |
| Spousal Benefits | $911 | $24 |
| Combined (Couple) | – | $74 |
Adjustments
The COLA changes the main insurance amount (PIA) of a recipient. The PIA is the amount of money they will get when they reach full retirement age. In 2023, someone’s PIA might have been $2,000. A 3.2% COLA would raise that amount to $2,064. Spousal, survivor, and disability payments will also be changed by this.
It is important to keep in mind that the monthly income may not be the same as the PIA. People who claim their benefits early get less money each month until they turn 70, while people who wait until after the full retirement age get more money each month. Medicare premiums, which are usually taken out of Social Security checks, can also change the amount of money that recipients get in total.
Planning
Even though the COLA is a nice bonus, it might not be enough to cover all of your daily costs, especially if prices are going up. People who will be getting a COLA should start making budgets before the official news. If the COLA isn’t enough, you might want to look for other ways to make money, like taking out more from your savings, looking for part-time work, or selling out your home.
Supplemental Security Income (SSI) and other government benefits are offered to people and couples who qualify. These perks are changed every year by the COLA, which could mean more money for you.
To get ready for the 2025 COLA, now is the time to organize your money. Make sure you know what’s going on, plan ahead, and are ready for whatever the official change is.
FAQs
What is the projected 2025 COLA percentage?
Experts predict around 2.63%.
When will the official COLA be announced?
In October 2024.
How much might a retired worker’s benefit increase?
About $50 per month on average.
Will spousal benefits increase as well?
Yes, approximately $24 per month on average.
What can beneficiaries do if the COLA isn’t enough?
Consider additional income sources or government benefits.