Social Security announces COLA increase for 2025 payments
According to Vibes.okdiario, At the start of each new year, the United States government implements the Cost of Living Adjustment (COLA) to Social Security checks. This adjustment is designed to combat price inflation directly, ensuring that retired U.S. citizens can continue to pay their bills without financial strain.
The Purpose of COLA
The primary goal of the COLA is to maintain the purchasing power of retirees. Without this adjustment, many U.S. citizens would struggle with rising costs, potentially jeopardizing their financial stability. Each year, this slight increase helps ensure that retirees and other beneficiaries don’t lose their financial footing due to inflation. Importantly, the COLA isn’t limited to Social Security retirement payments; it also applies to various other checks, such as Supplemental Security Income (SSI).
2025 COLA Increase: Early Payments for Retirees
Excitingly, for the year 2025, the Social Security Administration has announced that the initial COLA payments will be sent out ahead of schedule. This means that if you’re eligible, you can look forward to receiving your adjusted check sooner, providing a timely financial boost.
Key Benefits of COLA
- Helps Combat Inflation: COLA adjustments are crucial for keeping pace with rising costs.
- Maintains Purchasing Power: Ensures that retirees can afford their essential needs despite inflation.
- Broad Applicability: Affects both Social Security and Supplemental Security Income beneficiaries.
- Early Payments for 2025 COLA: Beneficiaries will receive payments sooner than expected.
January 2025 Payment Schedule
The first Social Security payment on the official 2025 schedule, including the Cost of Living Adjustment (COLA), is the January Supplemental Security Income (SSI). Typically, these benefits are disbursed on the 1st of each month. However, if the 1st falls on a holiday or weekend, the payment is moved to the preceding business day.
Also read: “Final SNAP Benefits in September: Receive Food Stamps Worth Up to $1,751”
Important Dates to Remember
- Payment Date: December 31, 2024
- Includes: January 2025 COLA
- Expected Increase: Approximately 2.5%
In January 2025, the 1st is a holiday, which means the Supplemental Security Income payment will be advanced to December 31, 2024. This early payment will include the 2025 COLA, even though it falls in 2024.
What to Expect from Your January SSI COLA Payment
On this day, the maximum payment will not be the usual $943. Instead, it will be that amount plus the 2025 COLA. While the exact amount is yet to be confirmed, projections suggest a COLA increase of approximately 2.5%. Therefore, you should add this percentage to your regular SSI check and other Social Security payments.
Historical COLA Increases
Understanding previous COLA increases can provide insight into what to expect. Here’s a brief overview of the COLA changes over the last five years:
- 2019: 2.8% – Adjusted for moderate inflation.
- 2020: 1.6% – A smaller increase aligned with lower inflation rates.
- 2021: 1.3% – One of the lowest adjustments, reflecting minimal inflation impact.
- 2022: 5.9% – A significant jump in response to rising inflation rates.
- 2023: 8.7% – The highest increase in decades, addressing the sharp rise in living costs.
How is COLA Calculated Each Year?
Measuring Inflation with the CPI-W
The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as the basis for the COLA calculation. The CPI-W is produced by the Bureau of Labor Statistics (BLS) and measures changes in the cost of a market basket of goods and services typically purchased by urban wage earners.
Determining Comparison Periods
- Current Year Average: The SSA calculates the average CPI-W for the third quarter (July, August, and September) of the current year.
- Previous Year Average: The SSA references the average CPI-W for the third quarter of the last year in which a COLA was determined. This is typically the previous year unless there was no COLA.
If the CPI-W has increased, the COLA percentage is rounded to the nearest one-tenth of one percent. This percentage increase is applied to the benefits starting in December of the current year, payable in January of the following year.
