The Social Security Administration (SSA) made a significant announcement on October 10, 2024, impacting every retiree and those receiving other benefits such as Supplemental Security Income. The announcement pertains to the cost-of-living adjustment (COLA) for Social Security recipients.
These adjustments are crucial as prices tend to rise over time. Without them, the purchasing power of retirees and other Social Security recipients would diminish over the years, as their stable income would not keep up with the increasing costs of goods and services.
To address this issue, an automatic formula calculates benefit increases annually. This calculation relies on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If the CPI-W data from the third quarter indicates a year-over-year price increase in a basket of goods and services, then a corresponding COLA is applied to benefits.
This year’s data indicated an increase in prices, leading the SSA to announce a 2.5% benefit increase for those receiving Social Security. This means that retirees and other beneficiaries will see their checks increase starting in January, with an average increase of approximately $50 per month according to SSA estimates.
The SSA will distribute personalized notifications detailing the benefit increases in December. The notification language has been simplified compared to previous years, facilitating better understanding for seniors about the exact increase applicable to them when the COLA takes effect.
Beneficiaries who have registered for a mySocialSecurity account online by November 20 will also have the option to view their COLA notifications digitally, offering a quicker alternative to the mailed notifications.
To estimate the benefits increase independently, recipients can multiply their current check amount by 2.5%. Although this method is not the exact calculation used by Social Security, it provides a close approximation.
Additionally, beneficiaries should be aware of potential increases in Medicare premiums for 2025 since these are often deducted directly from Social Security payments. Although the exact premium increase remains unannounced, experts predict a rise in costs, which could offset some of the COLA benefits.
It is important for retirees and Social Security recipients to take note of this announcement so they can plan for the upcoming cost-of-living adjustment and make necessary adjustments to their budgets.
