Farewell to the 2024 Cost-of-Living Adjustment: Social Security Announces an Unexpected Change to Checks Starting in January
News Team
With the official announcement of a cost of living adjustment (COLA) for 2025 by the Social Security Administration, millions of retirees are expected to receive a much-desired raise in their monthly checks. Never mind that Social Security serves as, like it or not, almost 30% of the income for Americans aged 66 and older. The data from the Social Security Administration indicates that Social Security represents 90% or more of the income for 15% of older women and around 12% of men. One core benefit of Social Security is an annual COLA designed to help keep payments on a relatively equal footing with the inflation rate. Unfortunately, the latest hike has left many with an empty feeling.
Monthly benefits increase by 2.5% starting January 1, 2025
The 2.5% cost-of-living adjustment becoming effective on January 1 this year is a serious point of connotation that Social Security benefits are important to help cover the rising costs of living. This increase almost equals the two-decade average of 2.6% annual rise; however, many beneficiaries claim they don’t get enough of their needs. A table representing some of the recent Social Security COLA increases is given below:
Year
COLA Increase
2015
1.70%
2016
0%
2017
0.30%
2018
2%
2019
2.80%
2020
1.60%
2021
1.30%
2022
5.90%
2023
8.70%
2024
3.20%
“The survey conducted found, namely, that 54% of retirees viewed the 2.5% increase as inadequate, while 31% labeled the increase as ‘completely insufficient.’ Since the average retirement benefit is $1,922 per month, which translates to almost $23,000 a year, this adjustment will only add about $48 per month-exactly for such an insignificant amount that other many retirees view uncaring.”
As long as Social Security COLAs are tied to the CPI-W, not the CPI-E, then retirees may get settlements that still don’t feel like they are keeping up with their actual cost changes. The CPI-W measures the costs experienced by working-age people and therefore necessarily undercounts the increases experienced by the elderly. More than any time in history, the elderly have their own specific inflation from high and rising medical costs.
How beneficiaries can plan for retirement beyond Social Security
Although a higher salary during your working years results in a larger Social Security payment, on its own it is likely to be inadequate to support most workers in retirement. As a result, retirees might consider other sources of retirement income, such as:
Social Security benefits
Stock dividends
Rental income
Pension payouts
Income from liquidating investment assets
Interest income from bonds, CDs, or savings accounts
Inheritances
Try Sony cashing in life insurance or delaying retirement works creatively because it requires a little ingenuity about other alternative options. A complete retirement plan can add significantly to one’s financial base while boosting the level of security of the person, greatly reducing the options of depending on Social Security as their primary source of income in retirement.
