Recent news says that a change to Social Security will give people more money, but they will have to meet certain conditions first. The official cost-of-living adjustment (COLA) for 2025 will be announced by the Social Security Administration soon after the Labor Department releases its September inflation data on October 10. COLAs protect Social Security’s buying power by making sure that benefit increases keep up with inflation.
Social Security checks for retirees will increase in October
It’s important to remember that seniors are eager to find out how much more money they will get from Social Security next year. This is because rising prices are getting harder to handle. In 2024, 63% of people polled in the US said they were having trouble paying their bills because of inflation.
This was up from 45% in 2021. One non-profit group, The Senior Citizens League (TSCL), thinks that benefits will get a 2.5% COLA next year. That would be the smallest rise in four years for people who get Social Security. Even if all benefits grow by the same amount, retirees over a certain age will still get the biggest nominal dollar COLAs.
The average Social Security payout for a retired worker in September 2024 will be $1,920. That amount will go up by $48 the next year thanks to a 2.5% cost-of-living adjustment (COLA). But seniors whose benefits are higher than average will get bigger nominal dollar COLAs, which means their payments will go up by more than $48.
In the same way, seniors whose benefits are below average will get smaller nominal dollar COLAs, which means their payments will go up by less than $48.
Further, if the average income for a retired worker at age 70 is $2,068 per month and the Social Security COLA for 2025 is 2.5%, then the average 70-year-old will get an extra $51.70 per month next year. Because no one else in their age group gets a big basic income, no one else will get a bigger COLA.
Retirees who delay Social Security benefits until 70 receive larger benefits
After age 62 to 70, retirees’ benefits tend to go up for each age group, then down for each age group after that. This means that at any given time, people who are retired and at least 70 years old get the most out of Social Security.
This is because of how funds are calculated. In particular, as we’ll see below, retired worker benefits are figured out by taking into account the claimant’s age and their total income:
- Step 1: The Social Security Administration uses a method to compute each person’s Primary insurance amount (PIA) based on income from the 35 highest-paid years of work. That occurs when a person reaches the age of 62 when they become eligible for retirement benefits; however, their PIA is revised each year for the remainder of their working life.
- Step 2: The PIA is adjusted based on the claiming age. People who begin receiving benefits before reaching full retirement age receive a lower payout, meaning less than 100% of their PIA. People who begin Social Security after reaching full retirement age receive a greater benefit, which equals more than 100% of their PIA. However, the motivation to postpone diminishes after the age of 70, so claiming later is never a good idea.
The PIA is regularly changed at both levels based on inflation data for all beneficiaries, even if they haven’t gotten their monthly benefits yet. Benefits are affected by three things: lifetime salary, the age at which you can claim, and inflation. But after age 70, the only thing that counts is inflation.
Most people will have retired by then, so they won’t be making any money that could increase their benefits. Also, getting Social Security after age 70 doesn’t change the amount they get.
In general, wages have grown faster than inflation, which means that new Social Security recipients will get bigger benefits faster. But things usually change after age 70. In 2025, retirees aged 70 and up will get the biggest checks and the biggest nominal dollar COLAs.
Also See:- New Amount Of Money In Social Security Retiree Checks – To Be Announced At This Time
