For the millions of people who depend on Social Security, any adjustment to these benefits represents more than just a number, and even if the percentage changed is small, it is the difference between covering basic needs and feeling safe from any unforeseen event or staying alert all the time for what may happen with inflation.
This 2025 is going to come with very good news, and that is that the increase in benefits will increase by 2.5% (we will explain everything to you now, don’t be impatient), this will be a small economic respite for those who face economic uncertainty every day in this inflation situation. Below we will explain this change in detail and how it will positively impact all Social Security beneficiaries!
What is the COLA?
It is called the Cost of Living Adjustment, and it is a small percentage added to each payment made by Social Security, with the aim of ensuring that its beneficiaries do not notice the impacts of inflation in their pockets. Explained another way, it means that each payment made by Social Security (whether it is an orphan’s pension, a retirement pension, or a disability pension) will have a percentage added to it so that beneficiaries maintain their purchasing power and can buy exactly the same thing with the same money at this time when prices continue to rise.
How is it calculated?
Very easy, the Consumer Price Index for Urban Wage Earners (CPI W) is adjusted, measured by the United States Department of Labor from one year to the next (normally, data from the third quarter of each year is used). By 2025, this increase will be 2.5%. which will translate into approximately $50 more per month for each retiree. This year’s figure is considerably lower than that of 2024 (which was +3.2%) and the historic +8.7 of 2023. This is not bad, it only means that there is a fairly evident improvement in the country’s economic data, although the situation has not yet been reached where this percentage does not need to be added.
For family economies, the COLA is important to compensate for food prices and essential family expenses.
Let’s talk about Mississippi: who is going to benefit the most?
In Mississippi there are about 470,000 people who only receive social security income (they are retirees!), in addition to this there are 106,000 beneficiaries of disabilities and more than 43,000 people who are widowed. So, this small increase will of course directly benefit these people, providing that little economic respite in a state where there are so many people who depend on these payments (they are their main sources of income).
For those who benefit from Supplemental Security Income (SSI), the updated payments will begin on December 31st while those from Social Security will already be seen from January 2025.
At what age can I start receiving Social Security?
Recent changes confirm that Full Retirement Age (FRA) will be from age 67 (for people born after 1960), but if you were born in 1959 you still have the hope of being able to retire at age 66.7.
On the other hand, there is the option of early retirement, which will be given from age 62, but this will mean that the maximum amount you receive in your payments will gradually decrease until you lose 30% of your benefits!!
Summary of key changes for 2025.
- You’ll be able to find out the exact amount through the My Social Security app.
- The Social Security Administration will email or text you more information about this change.
- Yes, the 2025 changes come with a new income limit, and payments will increase from $168,600 to $176,100, meaning that people with higher salaries will also contribute more to the Social Security fund.
- Medicare will also have its changes, and it will be available on its website.
- We’ll have to prepare our wallets for 2025 to arrive!