A $50 increase for retirees

According to recent news, the Social Security Administration announced Thursday that retirees in the United States will receive a 2.5 percent increase in their Social Security checks in 2025, which will average about $50 a month starting in January. Beneficiaries should be aware that the cost of living adjustment, often referred to as a COLA, is an annual increase set by the Bureau of Labor Statistics and based on the rate of inflation. For example, the COLA for 2024 was set at 3.2%, indicating higher inflation at that time. The rate is calculated by summing the third quarter inflation data from the Consumer Price Index for Urban Wage Earners and Office Workers (CPI-W).

Social Security has announced a new increase in pension checks

This year's increase is the lowest for retirees since 2020, when they saw a 1.3% increase. After that, the rate skyrocketed as a result of the COVID-19 epidemic, and this year the price increase rate has moderated to a more normalized, although still significant, level. An inflation rate of 2% is the Federal Reserve's goal. Those receiving Supplemental Security Income benefits — a program for seniors over 65 and people with disabilities — will see the same 2.5 percent increase. According to a statement from the Social Security AdministrationThe increase will benefit more than 72.5 million people. The government further stated that starting January 1, the maximum wage subject to Social Security tax will increase from $168,600 to $176,100.

Taking this official 2.5% COLA increase into account, SSI beneficiaries will receive an additional $17 per month on average, while individuals and couples will receive an additional increase of $24 and $35 per month, respectively. In addition to recipients of the Supplemental Security Income (SSI) From January 2025, pensioners, survivors and people with disabilities will also receive this annual increase. You can view all upcoming payment amounts per program below:

As you can see from the information above, pensioners are among the beneficiaries who will benefit thanks to the larger increases Cost of Living Adjustment (COLA). The new 2.5% adds an additional $122 for those retired workers who deferred benefits until age 70 and paid Social Security contributions based on maximum taxable income. It's important to note that this higher increase only applies to those eligible for the maximum benefit of $4,873 per month. Therefore, if you want to apply for this benefit, it is advisable to discuss your case with a financial advisor or social security expert so that you can increase your chances of being eligible.

How has the cost of living adjustment for retirees increased in recent years?

The cost of living adjustment (COLA) is probably one of the most serious issues facing the more than 64 million retirees in the United States. Based on numbers from the Social Security Administration, here's how COLA increase has evolved over the last decade: