anticipated Increase in Social Security Benefits by 2.5% COLA in 2025; learn the precise timeline for your supplementary income.
anticipated Increase in Social Security Benefits by 2.5% COLA in 2025; learn the precise timeline for your supplementary income.
Throughout the summer, there was a great deal of talk about the potential Social Security cost-of-living adjustment (COLA) for 2025. Retirees on Social Security were hoping for a significant increase following the 3.2% COLA at the beginning of 2024.
However, regrettably, the COLA in 2025 will not be as considerable. The decrease in inflation means that Social Security benefits will only receive a 2.5% boost.
At first glance, this might appear to be disappointing news. Nevertheless, upon further investigation, you may come to understand that the growth of living expenses is not increasing at the same pace as it was the previous year. Although your Social Security benefits might only increase modestly, this increase should be counterbalanced by the slowing inflation.
Additionally, you may wish to be informed about exactly when your 2.5% Social Security COLA will be credited to your account. Let me explain the timing of this raise to you.
When your Social Security raise will be credited
Social Security's 2.5% COLA becomes effective in January, so your first benefit check of the year will be greater than your last check in 2024. However, the exact date of when you receive this check depends on your birthday.
- If your birthday falls between the 1st and 10th of the month, your first increase in Social Security benefits should be deposited into your account on January 8, 2025.
- If your birthday falls between the 11th and 20th of the month, you should anticipate your first boosted Social Security payment on January 15, 2025.
- If your birthday falls between the 21st and the end of the month, your first enhanced benefit will be credited to your account on January 22, 2025.
The remainder of your Social Security benefits will subsequently follow this pattern in 2025. So, if you receive your first Social Security payment on the second Wednesday of the month, your subsequent benefit payments will also be made on that day throughout the year.
How much additional income will your Social Security COLA provide?
The typical Social Security beneficiary can anticipate an increase of approximately $49 in their monthly benefit in 2025. However, this does not factor in the potential increase in the cost of Medicare Part B.
Individuals who are enrolled in both Social Security and Medicare have their Part B premiums deducted from their benefits each month. Consequently, this is an important factor to keep in mind, as an increase in the cost of Medicare could result in a smaller Social Security increase than expected.
If this situation arises, and you are concerned about covering your expenses in the coming year, you may wish to explore the gig economy as a source of additional income. Working just five or ten hours a week could significantly increase your monthly income, potentially surpassing your upcoming Social Security COLA. And this could provide you with the financial breathing room you need to more easily manage your essential expenses while also setting aside money for leisure and other activities that can make your retirement much more enjoyable.
Despite the 2.5% Social Security COLA being less than some retirees had hoped for, it's important to consider that living expenses might not be increasing at the same pace as before. This moderate increase could still help mitigate the effects of inflation.
With the Social Security COLA becoming effective in January, retirees on Medicare should also bear in mind that the increase in Part B premiums could impact their overall income. If necessary, exploring opportunities in the gig economy for additional income could provide financial stability and enhance retirement enjoyment.