New COLA, new checks, new era for retirees

For millions of retirees, Social Security is an important source of income. And for many who rely largely on such benefits to pay their bills, annual increases can mean the difference between financial hardship and making ends meet. Social Security Benefits are subject to an annual cost of living adjustment, the primary purpose of which is to help recipients keep pace with inflation so they can stay current when the cost of living inevitably rises. As next year brings a new cost of living adjustment (COLA) and Social Security benefits, as well as a new era for American retirees, we want to focus on the most important issue they should understand.

New era of Social Security for retirees in 2025

Retirees can expect a COLA increase below the current 3.2%

The inflation adjustments for July, August, and September serve as the basis for Social Security COLAs. While data is available for July and August, no data is currently available for September. Based on available information, analysts predict an increase of 2.5% Social Security COLA in 2025. However, depending on the official inflation value for September, this number could fluctuate in either direction. In any case, Social Security's COLA in 2025 is expected to be less than the 3.2% increase enacted at the beginning of 2024.

The COLA increase for 2025 will be announced in October

Every year the Bureau of Labor Statistics (BLS) is the federal agency responsible for calculating the cost of living adjustment (COLA) so that the Social Security Administration and other agencies in the country can know the official percentage. According to the BLS, cost of living adjustments are typically announced in the second week of October. Once this official percentage is announced, it will take effect from January 2025. Therefore, the first checks that retirees will receive with the COLA increase will be issued on January 8, 2025.

How much will Social Security checks increase in 2025?

Your monthly Social Security benefits in 2025 may vary depending on several factors. A formal COLA figure, Medicare Enrollment Status and whether Part B costs will increase in 2025 are just a few. To give you an idea of ​​what to expect: A 2.5% COLA would initially increase your monthly benefit by $50 if you currently receive $2,000 in Social Security benefits. If you are not already enrolled in Medicare, the $50 increase should apply.

However, if you are enrolled in Medicare, your Rewards Part B will be immediately deducted from your Social Security benefits. If Part B costs increase by $10 per month in 2025, your increase will be reduced from $50 to $40. Here's a look at how Social Security checks for retirees could potentially increase next year:

Official channels to get more information about the COLA announcement

As previously mentioned, formal COLA notification from SSA will occur in the second week of October. The best course of action is to first check the news section of the SSA website for information for that day. While the update may be posted elsewhere on the site, the News section is generally the best place to look for updates of this type. Everyone should learn more about next year's Social Security COLA soon enough. For now, you can use the data above to start planning your finances for 2025 or at least get an idea of ​​the types of adjustments you may need to make.