Social Security recipients awaiting the 2025 cost of living adjustment (COLA) are in for a rude awakening. While many expected a significant increase similar to those seen following the pandemic.
Particularly after inflation surpassed the 3.2% increase received in 2024 in the first quarter of the year, the reality is that the summer brought good news for the economy but bad news for beneficiaries.
The Social Security Administration (SSA) announced a 2.5 percent increase in October, which will be implemented in January for all Social Security beneficiaries, not just retirees.
The Social Security Administration (SSA) manages five programs: survivors, retirement, disability, family, and Supplemental Security Income (SSI), and all benefits will be increased by this percentage amount.
How Social Security benefits will be affected by the COLA
If you want to know how the COLA will affect your specific benefit, you can calculate it yourself by checking the last payment you received and applying 2.5%.
That will give you the increase you will receive, and when you combine it with your current benefit, you will get the new amount you will receive in the New Year. It should help beneficiaries better budget and prepare for 2025 with a more adequate budget.
For those who do not wish to do so, the Social Security Administration provides some guideline benefits each year so that future beneficiaries know what the maximum amount they can expect.
For example, in 2024, SSI beneficiaries can receive a maximum benefit of $943 for individuals and $1,415 for couples. Meanwhile, the monthly maximum Federal amounts for 2025 are $967 for an eligible individual, $1,450 for an eligible individual and their eligible spouse, and $484 for an essential person.
Retirement benefits have some maximums that the SSA will not exceed, and these limits will be updated in 22025 using the COLA. Because retirement ages vary, the maximum benefit is determined by the age at which you retire.
For example, if you retire at the full retirement age in 2024, your maximum benefit will be $3,822. If you retire at age 62 in 2024, your maximum benefit is $2,710, while if you retire at age 70 in 2024, your maximum benefit is $4,873.
When the increase is applied, those who retire in 2025 at age 62 will receive a maximum benefit of $2,831, those who wait until full retirement age will see their maximum benefit increase to $4,043 and those who choose to claim the maximum benefit available by the SSA at age 70 will receive $5,108.
It is important to remember that most people do not qualify for the maximum benefits. To receive the maximum retirement benefit, a worker must have worked for at least 35 years and earned the maximum taxable income or more. Anything less, in terms of years or payments, will prevent them from receiving the full range of benefits.
SSI is means-tested, ensuring that only those in greatest need receive the highest benefits. In fact, the programs have very strict requirements that beneficiaries must meet in order to qualify, let alone receive the maximum benefit.
SSI payments are reduced by $1 for every $2 earned from work, which includes wages, self-employment, and other income-generating activities. Non-work income, including disability benefits, unemployment payments, and pensions, reduces SSI payments dollar for dollar. Additionally, a spouse’s income can influence the payment amount.
So, even if the 2025 COLA does not meet everyone’s expectations, it will at least help some SSA beneficiaries make ends meet and allow them to live a more comfortable life following the price increases we saw in 2024.
Read Also :- Direct Social Security payment to SSDI recipients in December. Exact payment dates announced
