3 Weeks Until the 2025 Social Security COLA Announcement – Here’s What We Know So Far

If you’re a senior who relies heavily on Social Security income, you’re likely eager to know how much your benefits will rise in 2025. Unfortunately, the official Cost-of-Living Adjustment (COLA) announcement is delayed until the Social Security Administration (SSA) receives all the necessary inflation data. Currently, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data for September hasn’t been released, leaving the final COLA number pending.

However, there’s already some insight into what 2025’s Social Security raise might look like.

What to Expect

Although we’re still waiting on September’s inflation data, the Senior Citizens League has estimated that the 2025 Social Security COLA could be around 2.5%. This would be a smaller increase than the 3.2% raise seniors saw at the start of 2024. That said, the final COLA figure could adjust up or down depending on how inflation behaves in September.

So far, the trend suggests inflation is slowing, and unless September brings an unexpected spike in prices, the 2025 COLA likely won’t differ much from the 2.5% estimate. There’s even a possibility that it could drop lower if inflation slows more than anticipated.

Impact

While the SSA determines the Social Security COLA independently, there’s another factor to consider: Medicare Part B premiums. For seniors who are enrolled in both Medicare and Social Security, Part B premiums are automatically deducted from monthly benefits. This means that if there’s a significant increase in Medicare Part B premiums, it could offset your COLA raise.

Even though the Medicare premium increase doesn’t directly impact the COLA percentage, it can reduce the actual dollar amount you take home each month.

Financial Planning

If you’re concerned that a 2.5% raise might not be enough to cover your rising expenses in 2025, it’s essential to start thinking about your options now. You may want to consider:

• Joining the gig economy: Many seniors are turning to part-time or freelance work to supplement their Social Security income. This could be a flexible way to make extra money.
• Cutting expenses: Consider reviewing your budget and identifying areas where you can cut costs or find savings.
• Boosting retirement savings: If you’re still in the workforce, even part-time, putting extra money into a retirement account can help.

COLA

You won’t have to wait much longer for the final announcement. The CPI-W data for September will be released on October 10, 2024. Once that’s out, the SSA will finalize the 2025 COLA, along with other key changes to Social Security, such as the earnings-test limit and the wage cap.

You can check the SSA’s website for the official COLA announcement on or shortly after October 10. However, you may need to wait until the Medicare Part B premiums are also announced to fully understand how much more (or less) you’ll be receiving each month in 2025.

Benefits

If you’re worried about not having enough in retirement, there are strategies you can investigate to increase your Social Security income. For instance, delaying your claim until after full retirement age can significantly boost your monthly payments. Other strategies include maximizing spousal benefits or working longer to increase your earnings record, which could replace lower-earning years in the Social Security formula.

By carefully planning, you can ensure that you’re making the most of your Social Security benefits, even in a year where the COLA may not feel like a big raise.

While the 2025 Social Security COLA is expected to be around 2.5%, there’s still some uncertainty until the final inflation data is released in October. This number could shift slightly, but it’s unlikely to differ drastically. Additionally, don’t forget to factor in Medicare Part B premiums, which could reduce the amount of extra money you take home in 2025.

If you’re concerned that a 2.5% COLA won’t be enough to cover your expenses, now is a great time to investigate other ways to supplement your income, such as part-time work or cutting unnecessary expenses.

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