The Social Security Administration (SSA) has not officially announced the cost-of-living adjustment (COLA) yet, but it looks like it will be 2.5% by 2025.
This will have a big effect on the payments that beneficiaries get. In times of rising prices and inflation, this increase is good news for people who get benefits, like a pensioner who gets $1,650 a month. To do good financial planning, you need to know how this change will affect your monthly income.
The purpose of the COLA is to help recipients keep their purchasing power as the cost of living rises. This change happens every year and is based on the Consumer Price Index.
It tries to show how prices of goods and services have changed for most people. Let us look at how much a $1,650 check would go up in 2025 with the 2.5% COLA to get a better idea of what is going on.
Calculating the Social Security COLA Increase
To calculate the increase you will get in 2025, we simply multiply your current monthly payment by the COLA percentage. In this case, if your monthly check is $1,650, the calculation would be as follows:
- Increase = $1,650 = $41.25.
Therefore, with a COLA of 2.5%, your monthly income will increase by $41.25. This means that, as of 2025, you will get a total of:
- Total = $1,650 + $41.25 = $1,691.25.
This means that your new monthly check will be around $1,691.25. This raise could be very important to help pay for extra costs that come up because of inflation, like higher prices for food, housing, and health care.
Even though the COLA never quite catches up with inflation, any help in this area is always welcome. This means that people who are retired can enjoy a bigger check.
Implications of the COLA for Social Security Beneficiaries
The cost-of-living adjustment is very important to make sure that people who get Social Security can handle the money problems they have every year.
A small raise of $41.25 a month might not seem like much, but for people who depend on this income to meet their basic needs, it can make a big difference. Since the cost of living is going up, every penny counts, and this change is a welcome relief.
Also, people who get the COLA should remember that even though it is helpful, it does not always fully cover rising costs of living. So, it is important for people to plan their money well and look for other ways to make money or get help if they need it.
Even though the cost-of-living adjustment is helpful, you still need to do a lot of planning for your long-term financial health.
To sum up, the 2.5% COLA for 2025 will mean that people making $1,650 a month will get an extra $41.25 every month. This change is good news because it lessens the effects of inflation, but people who are benefiting from it need to be smart about their money planning to make sure they can keep meeting their needs as prices keep going up.
The COLA on all Social Security checks will go up in 2025, no matter how much they currently get. So, all we have to do to figure out what your check is for January of next year is do the math operation above.
Do not forget that people who get disability or old age retirement benefits as well as people who get supplemental security income get the COLA.
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