Social security beneficiaries are eager to see how another cost-of-living adjustment (COLA) in 2025 will affect their monthly payments. This is because the payment of Social Security benefits is adjusted based on inflation, thereby ensuring retention of purchasing power. However, many estimates have been made concerning possible increments on payments, but the medicare Part B premiums can be a crucial factor which will determine how much more money you will receive.
How much will social security payments increase in 2025
The COLA is calculated based on inflation data of the third quarter of the year, the final increase will not be officially announced until October 2024. However, predictions from the Senior Citizens League suggest a 2.5% increase for 2025.
Therefore this means that for an average retired worker currently getting $1,920.48 monthly, there would be an increase of $48 each month if there was a 2.5% increase in their COLA. This translates to an annual increment of about $576 which even though is not huge is still helpful to various seniors who use Social Security as a major source of income.
Medicare Part B: The wild card in your Social Security increase
Even though the 2.5% projected COLA increase may be appealing, it is important to remember that Social Security benefits are deducted for Medicare Part B premiums, which cover doctor visits and outpatient care. So any increase in Medicare premiums influences how much COLA increase you get.
For example, in 2024, Medicare Part B increases by $9.80 monthly. If again they go higher in 2025, this might affect the net increase from the Social Security COLA. As a result, many retirees have seen it as a wild card that greatly affects their income.
If you are now on both Social Security and Medicare, do not forget about the possibility of an increase in the Medicare Part B premiums before celebrating the increase in COLA. This means that with the projected $48 COLA increase, a hike in the Medicare premiums can reduce the amount thus reducing the total amount you get as social security.
Balancing your expectations: What to watch for in 2025
As you plan for your financial future, it’s important to consider the full picture. While the COLA is meant to help offset the rising cost of living, especially for essentials like healthcare, Medicare Part B can reduce how much of that increase you actually see.
For retirees who depend on Social Security as their primary source of income, a relatively modest COLA may mean that you need to explore other options to supplement your income. Whether that’s cutting back on expenses, looking into reverse mortgages, or even finding part-time work, there are ways to ensure financial stability, even if Medicare costs rise.
In 2025, Medicare Part B will likely play a decisive role in how much your Social Security payments go up. Keep an eye on the official announcements in October to get a clearer picture of what your income will look like next year.
With both the Social Security COLA and Medicare premium changes in mind, planning ahead can help you make the most of your benefits.
