Social Security Announces New Check Increase for 2024 – Here’s the Exact Date:
For millions of elderly workers in the US, Social Security benefits provide a financial lifeline. The average monthly income of $1,918.28, or slightly over $23,000 annually, is vital for more than 51 million recipients to cover their daily needs. Social Security helped 22.7 million people, including 16.5 million adults 65 and older, escape the federal poverty level in 2022.
Gallup polls further highlight this dependency on Social Security, revealing that 80–90% of retirees rely on their payments to cover living expenditures. In light of this, the annual Cost-of-Living Adjustment (COLA) announcement in October is eagerly awaited, despite modest expectations for the COLA in 2025.
COLA History
The purpose of Social Security’s COLA is to help recipients preserve their purchasing power by offsetting inflation. COLA changes were rare and required Congressional approval before to 1975. Since then, COLAs have been calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W monitors increases in prices in a range of spending categories and subcategories, capturing the inflation that urban workers face.
The average CPI-W values from the third quarter of the year (July through September) are used to compute COLAs. Social Security benefits are increased if the average CPI-W rises from the prior year. Although not considered in the computation, the data from the prior 12 months outside of this time frame can show patterns in inflation.
Estimated COLAs
COLAs have fluctuated greatly over the last 15 years, with some years experiencing no increase at all. In 2010, 2011, 2016, and 2017, for example, there were no COLAs; in contrast, the smallest increase, of 0.3%, occurred in 2017. Nonetheless, there have been notable rises over the last three years: 3.2% in 2024, 8.7% in 2023, and 5.9% in 2022. Given that it was the biggest percentage increase in 41 years and the biggest nominal dollar increase in the program’s history, the 8.7% COLA in 2023 was especially noteworthy.
Estimates for 2025 point to a COLA increase of between 2.7% and 2.63%. These numbers are noteworthy even if they are less than the rises of the previous three years. For the first time in 28 years, recipients would receive a COLA of at least 2.6% for four years in a row with an increase of 2.6% to 2.7%. Additionally, it would mark the first time in thirty-two years when rises have been at least 2.7% for four years in a row.
Effect of COLA in 2025
The average monthly benefit for retired workers, which is presently approximately $2,000, would increase somewhat if the anticipated COLA of 2.6% to 2.7% comes to pass. For instance, a 2.6% increase would result in a monthly payment increase of about $49.88, or roughly $2,051.79. Likewise, an increase of 2.7% would bring about an additional $51.79, or nearly $2,053.98 each month.
The COLA would also provide a small increase to other benefits, like the 7.2 million disabled workers and the 5.8 million surviving spouses. Depending on the final COLA rate, surviving spouses may receive an additional $39.20 to $40.71, while disabled workers may see an increase of between $39.98 and $41.52.
Even if they are little, these changes are crucial to assisting beneficiaries in managing their growing living expenses. Additionally, they emphasize how crucial Social Security is to the financial security of millions of Americans, especially given how heavily dependent they are on these payments.
In summary, even if the 2025 COLA might not be as big as it has been in recent years, it is still a vital part of making sure Social Security benefits rise in line with inflation. To maximize their adjusted benefits, beneficiaries should keep an eye on these modifications and adapt their plans accordingly.
FAQs
How is the COLA for Social Security determined?
based on the July–September CPI–W.
What was the 2023 COLA?
In 2023, the COLA was 8.7%.
How much will benefits be increased by the COLA in 2025?
2.6% to 2.7% growth is anticipated.
For retirees, why are COLAs important?
In the face of inflation, they aid in preserving purchasing power.
Usually, when are COLA announcements made?
Based on CPI-W statistics from the third quarter in October.