For the millions of people who rely on Social Security, any change to these benefits is more than just a number; even if the percentage change is small, it means the difference between meeting basic needs and feeling safe from any unforeseen event or staying vigilant at all times for what may happen with inflation.
This 2025 will bring extremely excellent news, as the increase in benefits will grow by 2.5% (we will explain everything to you now, don’t be impatient), providing a modest economic reprieve for people who confront economic uncertainty every day in this inflationary environment.
Below, we will go over this adjustment in depth and how it will benefit all Social Security recipients!
What is the COLA?
The Cost of Living Adjustment is a tiny percentage applied to each Social Security payment with the goal of ensuring that its beneficiaries do not feel the effects of inflation in their pockets.
To put it another way, it means that each payment made by Social Security (whether an orphan’s pension, a retirement pension, or a disability pension) will have a percentage added to it so that beneficiaries maintain their purchasing power and can buy exactly the same thing with the same money at a time when prices are rising.
How is it calculated?
The Consumer Price Index for Urban Wage Earners (CPI W), as determined by the United States Department of Labor, is updated from one year to the next. By 2025, this rise will be 2.5%, which equates to about $50 extra each month for each retiree.
This year’s result is significantly lower than that of 2024 (+3.2%) and the historic +8.7 in 2023. This is not terrible; it just indicates that there has been a noticeable improvement in the country’s economic data, however the situation has not yet reached the point when this percentage does not need to be added.
The COLA is vital for family economics since it compensates for food prices and other essential family expenses.
Let’s talk about Mississippi: who is going to benefit the most?
In Mississippi, around 470,000 people rely solely on social security income (they are retirees!), with an additional 106,000 disability beneficiaries and over 43,000 widowed individuals.
So, of course, this tiny increase will directly benefit these people, offering some economic relief in a state where so many people rely on these payments (they are their primary source of income).
Supplemental Security Income (SSI) recipients will see revised benefits beginning December 31st, while Social Security recipients will see them beginning in January 2025.
At what age can I start receiving Social Security?
Recent adjustments confirm that the Full Retirement Age (FRA) will be 67 (for those born after 1960), although if you were born in 1959, you may still be allowed to retire at 66.7.
On the other side, there is the option of early retirement, which is available beginning at age 62, but this means that the maximum amount you receive in payments will steadily decline until you lose 30% of your benefits!!
Summary of key changes for 2025.
- You’ll be able to find out the exact amount through the My Social Security app.
- The Social Security Administration will email or text you more information about this change.
- Yes, the 2025 changes come with a new income limit, and payments will increase from $168,600 to $176,100, meaning that people with higher salaries will also contribute more to the Social Security fund.
- Medicare will also have its changes, and it will be available on its website.
- We’ll have to prepare our wallets for 2025 to arrive!
Also See: Social Security Changes Again in January – 5 New Changes Announced