As the cost of living rises, social security beneficiaries tend to have a much-needed increase in benefits. One key note is that the yearly Cost of Living Adjustment (COLA)is designed to keep social security payments balanced with inflation. This adjustment is reflected in your monthly check, which ensures that your purchasing power can combat the rising cost. Learn the exact date when social security checks will increase according to COLA.
What Is COLA and Why Does It Matter?
The Cost of Living Adjustment (COLA) in simple terms can be seen as an annual change that is made to social security payments. This is also based on the Consumer Price Index for Urban Wage Earner and Clerical Worker (CPI-W) which keep track of inflation. COLA is a tool that ensures the social security payment matches up with the rising cost of goods and services.
What do you think will happen without COLA? Well, first of all, the purchasing power of social security benefits will diminish over a given period as constant inflation erodes the market value of the Dollar. One key note is that this adjustment is vital for those earning a fixed income, they include retirees and people that are some sort of disability and are relying heavily on social security payments to pay for their daily needs.
When Will the COLA Increase Take Effect?
One exciting news is that the Social Security Administration (SSA) has made an announcement stating that the new COLA increase will begin with the January payment for 2025. This, in other words, means that the first checks that reflect the higher amounts will be deposited or mailed out in the first few days of January. Furthermore, the exact dates vary depending on our date of birth:
- If your birthday is between the 1st and the 10th of the month, you will be receiving your payment on January 3rd, 2024.
- If your birthday is between the 11th and the 20th of the month, your payment will be sent out to you on January 10th, 2024.
- If your birthday is between the 21st and the 31st of the month: then you should be expecting your payment on January 17th, 2024.
How Much Will Your Check Increase?
The exact percentage of the COLA in which increase will be announced in October 2024. Furthermore, this figure is calculated by comparing the average CPI-W from the third quarter of the current year to the same period in the previous year. recently, COLA has been in the range of 1.3% to 5.9%, depending on the level of inflation.
An illustration to boost your understanding, Imagine an individual receives $1,500 per month, with a COLA increase of 3%. The individual’s new monthly payment would be $1,545, which is an additional $45 each month. Over the year, this increase would amount to an additional $540.
What You Should Do Next
It is important to note that you do not need to take any action to receive the COLA increase. This adjustment will be automatically applied to your Social Security payments. However, it will be wise to review your budget and see how the extra income can help balance the rising costs of goods and services such as groceries, utilities, and healthcare expenses.
One keynote for you is that, for those who use direct deposit, the new payment will be reflected in your account on the regular payment date. Furthermore, if you do receive paper checks, ensure to keep an eye on the mail and get your expected dates.
