Welcome to Extreme Investor Network, where we provide you with unique and valuable information to help you make the most of your personal finances. Today, we are diving into the recent announcement from the Social Security Administration regarding the cost-of-living adjustment (COLA) for 2025.
According to the Social Security Administration, more than 72.5 million Americans will see a 2.5% increase in benefit payments in 2025. This means that the average Social Security retirement benefit will increase by about $50 per month starting in January. While this may not seem like a significant increase, it is important to consider the impact it can have on older Americans who rely on Social Security as their primary source of income.
In recent years, COLAs have fluctuated in response to inflation rates. The 2.5% increase for 2025 is the lowest annual increase since 2021, when beneficiaries saw a 1.3% increase. In contrast, beneficiaries saw the highest increases in four decades in 2023 and 2022, with 8.7% and 5.9% boosts to benefits, respectively.
With the pace of inflation slowing down, the cost-of-living adjustments have become more average. Over the past 20 years, Social Security’s annual benefit increases have averaged about 2.6%, according to the Senior Citizens League.
It is important for current beneficiaries to understand how their benefit checks will be impacted by the COLA. By multiplying their current monthly benefit check amount by the percentage increase, they can get an approximate idea of how much their benefits may change. It is also essential to factor in Medicare Part B premiums, which are often deducted directly from benefit checks.
For those considering when to claim retirement benefits, it is worth noting that benefits increase by 77% for waiting to claim from age 62 to age 70. This highlights the importance of making informed decisions when it comes to claiming Social Security benefits.
The Social Security Administration plans to notify beneficiaries of their new benefit amounts by mail starting in December. Additionally, beneficiaries can access their COLA statements online, but they must have a My Social Security account by Nov. 20 to see their notices.
Stay tuned for updates as this story develops. At Extreme Investor Network, we are dedicated to providing you with the latest insights and strategies to help you navigate the world of personal finance. Make sure to bookmark our site for more valuable content on financial planning, investing, and retirement.