The new cost-of-living adjustment (COLA) for 2025 social security benefits increases announcement continues to keep beneficiaries waiting in anticipation. COLA is implemented each year to keep up with rising costs and inflation so that monthly benefits maintain their purchasing power for the incoming new year. However, The Senior Citizens League (SCL) has stated before that the purchasing power of benefits has declined by 20% since 2010 despite COLA implementations.
No official announcement yet, but projections are lower than expected
COLA for 2025 will be officially announced on October 10th 2024. While COLA is not directly added to your benefits and is instead added to your Primary Insurance Amount, you can still get a very close approximate as to what your new benefits amount will increase to by adding COLA to your current benefits. The current projected COLA statistic is 2.5%. If you were receiving $2,000 per month, this will increase to approximately $2,050.
For the 2024 year, COLA was set at 3.2%. The projected 2.5% is lower than what was initially expected and would be the lowest COLA statistic since the 2020 COVID-19 pandemic. In 2022, COLA achieved a record high of 8.7% due to the pandemic’s drastic effects on cost-of-living. Since its inception in 1975, the highest COLA statistic implemented was 14.3% in 1980.
Other key dates to remember
While the COLA announcement is the most anticipated event, there are two other key dates beneficiaries should take note of. In early December of 2025, the Social Security Administration will send personal notices to all beneficiaries outlining the exact increase they will receive for the 2025 new year. While you can estimate it yourself with the October announcement, you will be informed the exact amount before the close of 2024.
January 8th of 2025 will see the first batch of social security checks go out with the adjusted amount. These checks will be sent to beneficiaries born on the first to the 10th of any month. Those born on the 11th through to the 20th of any month will see their first benefit increase on January 15th 2025. Lastly, those born on the 21st to the 31st of any month will receive their first increase on January 22nd, 2025.
Why is a higher COLA not necessarily a good thing?
Some beneficiaries may be concerned about the projected COLA statistic being the lowest it has been since the pandemic. However, it is important to remember that COLA is based off of inflation which is an overall indicator of how well the economy is doing. While a high COLA might seem attractive as it means you will receive more money, in actual fact is isn’t a good thing as it highlights that the economy is struggling.
The lower COLA is a good indication that the economy is beginning to stabilize as industry recovers from both the pandemic and the ongoing war in Ukraine impacting gas prices. Prices are subject to change at any given moment however depending on the state of the broader socio-economic landscape of the world. While a lower COLA may be projected now, there’s no saying prices won’t sky rocket again for whatever reason next year.
However, beneficiaries have also pointed out that COLA is based off of the CPI-W which measures the spending habits of current wage owners. Social Security is intended for retirees who spend substantially more on healthcare and and housing expenses. These spending habits are under represented in the CPI-W due to the younger age-group focus which means price increases for services beneficiaries uitilizes the most are not always taken into account as much as they should be which delivers a lower COLA than what is needed.
