Anticipation Grows for the Social Security COLA Announcement
As the end of 2024 approaches, many Americans are eagerly awaiting the announcement of the 2025 Social Security cost-of-living adjustment (COLA). This adjustment, made annually, helps beneficiaries keep pace with inflation and maintain purchasing power. Although the exact percentage isn’t yet confirmed, projections are estimating a COLA of around 2.5% for 2025, slightly below this year’s 3.2% increase.
However, the COLA announcement is just the beginning of several important dates to mark on your calendar. Here’s a detailed look at the key dates you need to know.
1. October 10, 2024: The Big Announcement Day
The Social Security Administration (SSA) will officially announce the 2025 COLA on October 10, 2024. This date is highly anticipated by the millions of Americans relying on Social Security benefits.
How is the COLA calculated? The SSA will use data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of 2024 (July, August, and September). The average of these numbers will be compared to the same period in 2023. The difference is what determines the COLA.
While the COLA percentage isn’t applied directly to your Social Security checks, it affects your Primary Insurance Amount (PIA) — the benefit amount you would receive at your Full Retirement Age (FRA). If you’ve already claimed Social Security, the COLA will adjust your current payment based on your age and when you started receiving benefits.
For example, if you’re currently receiving $2,000 per month and the COLA is 2.5%, you would see an increase of $50 per month, bringing your total monthly benefit to $2,050 in 2025.
2. December 2024: Personalized COLA Notices Arrive
Once the official COLA has been announced in October, the SSA will begin sending out personalized COLA notices to all beneficiaries in early December. These notices will detail how much your benefit will increase in 2025.
If you have a my Social Security account, you can view your COLA notice online through your Message Center. Signing up for email or text alerts is also recommended, as it will notify you when the notice becomes available.
For those who prefer paper statements, the SSA will mail notices throughout December. However, given the number of recipients, the SSA advises beneficiaries not to contact them regarding missing notices until January 2025.
3. January 2025: First Checks with the 2025 COLA
The 2025 COLA will be applied to your December 2024 payment, but because Social Security checks are issued in the month after they are due, you will see your first check reflecting the new COLA in January 2025.
The date you receive your first check depends on your birthdate:
- Born on the 1st-10th of the month: You will receive your check on January 8, 2025.
- Born on the 11th-20th of the month: You will receive your check on January 15, 2025.
- Born on the 21st-31st of the month: You will receive your check on January 22, 2025.
Supplemental Security Income (SSI) recipients will get their payments even earlier. Since January 1, 2025, is a federal holiday, SSI beneficiaries will see their payments on December 31, 2024.
What is COLA and Why Does It Matter?
The Cost-of-Living Adjustment (COLA) is an annual change to Social Security benefits designed to keep pace with inflation. Without these adjustments, beneficiaries could lose purchasing power as the cost of living increases.
Each year, the SSA looks at the CPI-W to determine the rate of inflation. If prices have increased from one year to the next, the COLA ensures that Social Security payments rise in tandem, helping seniors and other beneficiaries afford essentials like housing, food, and healthcare.
How to Estimate Your 2025 Social Security Payment
While the COLA for 2025 won’t be officially announced until October, you can still estimate what your new benefit will look like based on the projected 2.5% increase.
Simply take your current monthly benefit and multiply it by 1.025. For example:
- If you currently receive $1,500 per month, a 2.5% increase would result in an additional $37.50 per month, bringing your total to $1,537.50.
- If your benefit is $2,000 per month, you would see a $50 increase, bringing your new total to $2,050.
Preparing for 2025: Budgeting with Your New Benefit
Once you know your new Social Security benefit amount, you can start planning for the upcoming year. While a 2.5% increase may not seem significant, every dollar counts, especially for those relying on Social Security as a primary source of income.
Consider how the extra funds can be used to cover rising costs, whether it’s healthcare, utilities, or daily living expenses.
If you’re also receiving Supplemental Security Income (SSI), you’ll want to check the SSI COLA rate as well. Historically, it mirrors the Social Security COLA, but it’s important to review your COLA notice to understand the exact increase for SSI payments.
How Does the 2025 COLA Compare to Previous Years?
While 2.5% may seem modest compared to recent COLAs, it’s still an increase. In 2024, beneficiaries saw a 3.2% adjustment, while the 2023 COLA was a whopping 8.7%, one of the highest in recent history due to surging inflation.
The 2025 COLA is expected to be smaller as inflation stabilizes, but it’s still essential to ensure that retirees and other Social Security recipients don’t lose purchasing power.
What Happens If You Delay Claiming Social Security?
If you haven’t yet started receiving Social Security benefits, the 2025 COLA will still impact your future checks. The COLA is applied to your Primary Insurance Amount (PIA), which determines your benefits when you reach your Full Retirement Age (FRA).
Delaying benefits beyond your FRA increases your monthly payments, and the COLA will be factored into that increase. For example, if you’re eligible to claim benefits at 67 but delay until 70, your PIA will be higher, and you’ll receive the 2025 COLA adjustment when you eventually start collecting.
Understanding Your COLA Notice: What to Look For
When your personalized COLA notice arrives in December, it will contain important details regarding your new benefit amount, including:
- Your new monthly payment: This is the total benefit you’ll receive in 2025, factoring in the COLA.
- Deductions: Any deductions for Medicare Part B premiums or other withholdings will be outlined.
- Taxable benefits: If you’re subject to taxes on Social Security, the notice will include relevant information.
If you have questions after receiving your COLA notice, it’s recommended to wait until early January to contact the SSA, as their customer service lines are typically busy during the holiday season.
Conclusion: Stay Informed and Plan Ahead
The 2025 Social Security COLA is just one piece of the puzzle when it comes to retirement planning. While the projected 2.5% increase may not seem substantial, it will still provide a boost to millions of Americans.
By marking these key dates on your calendar and staying informed, you can better plan your budget for the upcoming year and ensure you’re prepared for any changes to your Social Security and SSI benefits.
If you haven’t already, consider setting up a my Social Security account to easily access your COLA notice and other important documents. And as always, keep an eye on the Social Security Administration’s website for the latest updates on COLA and other key benefits.
