Anticipate a superior-than-typical 2025 Cost-of-Living Adjustment (COLA) if Your Social Security Payment Exceeds This Particular Amount
The Department of Social Security will unveil the 2025 Cost-of-Living Adjustment (COLA) on October 10, 2024. Up until that date, you're stuck guessing what the figure might be. Based on current data, predictions suggest the COLA will be lower than what retirees have experienced in recent times.
This isn't great news for seniors dealing with escalating expenses and limited retirement income sources. But before panicking, bear in mind that everyone experiences a slightly different boost in their payments. Here's how you can figure out if you'll be among the lucky few to receive more than the average increase.
Just how far will the COLA reach?
When the new COLA kicks in, all Social Security beneficiaries witness their payouts increase by the same percentage. However, since everyone receives different amounts, this translates to a varying dollar increase.
As of August 2024, the average monthly Social Security benefit for retired workers is $1,920. If your current payments exceed this figure, you can expect a higher-than-average COLA in 2025, dollar-wise.
The Senior Citizens League's latest projections suggest a 2025 COLA of approximately 2.5%. This would bump up the $1,920 average to $1,968 per month - a $48 boost. As long as the COLA doesn't fall below this estimate, you can anticipate an additional $48 or more in your monthly Social Security income if your current payouts exceed the $1,920 average.
Wishing to estimate your potential 2025 payouts? Simply add 2.5% to your current payments. Keep in mind, though, that the official number won't be released until October 10.
What if the COLA isn't sufficient?
It's highly probable that the 2025 COLA won't be sufficient to counteract the price hikes some retirees have encountered over the past year. It's disappointing, and many attribute this to the way the government calculates COLAs. Regrettably, only the government has the power to change this, leaving retirees to find other ways to cope with the shortfall.
Personal savings are a boon if you've got some, but many others lack substantial retirement savings, forcing them to turn to alternative income sources.
Going back to work might not be the most appealing option, but it can offer you a steady monthly income. And you don't have to return to your old job - retirement often opens up opportunities that better suit your interests. Part-time and remote positions can further expand your income options. Remember, you only need to earn enough to supplement your Social Security checks and personal savings.
Additionally, you might be eligible for other government assistance to help cover essential expenses like food, housing, utilities, and healthcare. Make sure to submit your application early if you anticipate needing this aid in 2025, as the government takes time to review requests.
Once the 2025 Social Security COLA is announced, you can fine-tune your budget for the upcoming year (if you haven't already). Have a plan in place before January, so you know exactly how much you can withdraw from your savings and how much you'll get from other sources to meet your expenses.
After considering the potential 2.5% COLA increase, retirees with current payments exceeding the $1,920 average can anticipate a boost of at least $48 in their monthly Social Security income. Unfortunately, this might not be enough to counteract the inflation experienced by some retirees, leading many to explore other sources of income, such as part-time work or government assistance for essential expenses.
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