The moment everyone has been anticipating is here, the information about the Social Security Cost of Living Adjustment (COLA) increase expected in 2025 is finally here and it is projected at 2.5%. For example, if you happen to be a recipient of Social Security benefits, you might want to know how much your monthly checks will increase. Although the Social Security Administration (SSA) has provided no official announcement of when SSA is expected to increase the benefit amounts for its members, there is a straightforward and easy way of forecasting the increase today. Here’s how you can compute how much you will receive starting 2025.
How to calculate your 2025 Social Security COLA increase
There is no need to wait for the official full press release from the SSA, which will contain all details regarding the cost-of-living adjustments (COLA) for Social Security payments and other benefits, to know how much exactly you will be able to receive as an increase in Social Security payments. Nowadays, it is very easy to calculate the amount that will be added using the COLA percentage, which in this case is expected to be 2.5% for 2025. Here is how you can come up with the estimated increase:
- Take your current monthly benefit amount: Look at the last Social Security statement or payment that you received.
- Multiply your current monthly benefit 0.025 (2.5%): This will give you the amount in dollars that will be added to your previous payment.
- Add the result to your current benefit: The sum will be your projected benefit for the year 2025.
So, let’s assume that you get $1,500 per month at the present moment. In this case: 1,500 x 0.025 = 37.50. This means that as of January 2025, your payment will be roughly $1,537.50.
You can also try out the online benefit calculator by the SSA.
When will you start receiving the COLA increase?
The initial Social Security payments that will come with the increase in the Cost of Living Adjustments (COLA) for the year 2025 will be payable in the month of January, 2025. Nonetheless, if you are a beneficiary of Supplemental Security Income (SSI), you would see your payment a little earlier. In fact, those on SSI benefit will see their first payment with the new COLA on 31st December, 2024, given that the scheduled date for the payment falls on January 1, new year’s day which is a federal holiday.
Will medicare costs affect your COLA increase?
Many beneficiaries frequently ask whether the forthcoming COLA increase will have any impact on Medicare. In most instances, a certain money is withheld from the monthly payments of social security benefits specifically for Medicare Part B coverage. Regardless, if there is an increase in Medicare premium it will be deducted from your COLA, thus lowering your monthly payment.
To illustrate this, assuming that the cost of living adjustment makes your SSI payment $50 more than usual but there is a $25 increase in your medicare premium, you would only get an additional $25 every month. While the actual Medicare premium costs for the year 2025 have not yet been announced, prepare yourself for changes.
How can you check your new benefit amount early?
It will not be necessary for you to wait for a letter from the Social Security Administration to know the precise new amount of your benefits. Here is a method to check it beforehand:
- Sign up or Log in to “my Social Security” account: The SSA will post individualized COLA notices in the Message Center for the beneficiaries as early as December 2024. Having an account online enables you to gain access to this information well ahead of the official mail notification.
- Check your bank statement or your EBT card: if you receive your benefits directly or electronically through your benefit transfer card, you will be able to track your January payment.
It is quite easy to register for a “my Social Security” account online, which allows you access to useful information such as your annual cost of living increase COLA.
Why is the 2025 COLA expected to be lower?
In 2024, the cost-of-living adjustment (COLA) went up by 3.2%. But in 2025, the COLA is predicted to drop further to around 2.5%. The reason is that COLA will be dependent on the inflation rate of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The third quarter 2024 CPI-W forecasted that the inflation rate has decreased, leading to a reduction in COLA.
However, even with the increase being lower than that of the previous year, it is still an important increase to assist beneficiaries in managing the high costs of essential services such as healthcare, food, and housing among other services.
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