Social Security will officially unveil the 2025 COLA in October, perhaps on the 10th. However, there are many Americans interested in knowing how it will impact retirees’ payment amounts. Not only will retired workers see a boost, but those who qualify for spousal Social Security benefits will also notice an increase next year.
While it is still uncertain the exact size of the increase, we can make some educated guesses based on current spousal benefits and the latest projections for the 2025 COLA. Here’s a closer look at how spousal benefits might change next year.
Impact on Social Security Spousal Benefits
Social Security COLAs are determined by third-quarter inflation data, which is why the official announcement won’t come until October. However, with inflation cooling, it’s reasonable to expect that the 2025 COLA will be lower than the 3.2 percent adjustment Social Security beneficiaries received in 2024 and significantly below the 8.7 percent increase seen in 2022 during a period of high inflation.
As we look forward to 2025, the latest projections from The Senior Citizens League estimate a Cost-of-Living Adjustment (COLA) of around 2.63%. For the average retired worker, whose monthly benefit stands at $1,918 as of June 2024, this adjustment translates to an additional $50 per month.
Spousal benefits will experience a smaller increase, with an estimated bump of just $24 per month from the June 2024 average of $911 per month. This smaller increase is logical because COLAs are calculated as a percentage of your benefits, and spousal benefits are generally lower than retirement benefits.
Combined Benefits for Couples
For couples where one partner receives a retirement benefit and the other a spousal benefit, the combined monthly increase will be approximately $74. However, if your monthly checks exceed the averages mentioned, you could see a larger increase.
What If the COLA Isn’t Enough?
Americans concerned that the 2025 COLA may not sufficiently cover your living expenses, try not to worry. There’s still some time left, and there’s a slight possibility that the COLA may rise a bit more. The current estimate of 2.63% is already an improvement from the 2.57% forecasted in June.
Nevertheless, it’s important to manage expectations, as it’s unlikely that you’ll see an increase of hundreds of dollars per month if your benefits are around the average amount. Planning for your financial future is essential, especially once you know the official Cost of Living Adjustment (COLA).
With this information, you can start to plan your budget for the upcoming year. If you find that your checks don’t stretch as far as they used to, you might need to supplement your income by withdrawing more from your personal savings. Additionally, you can diversify your retirement income through various means such as taking on a part-time job or renting out properties you own.
Explore Additional Government Benefits
It’s also worth exploring other government benefits that may be available to you. One such benefit is Supplemental Security Income (SSI). Administered by the Social Security Administration, SSI is a monthly benefit designed for the blind, disabled, and low-income seniors.
For 2024, qualifying individuals could receive up to $943 per month, while couples could receive up to $1,415 per month. These amounts are adjusted annually based on the Social Security COLA. SNAP benefits, the former Food Stamps may also come in handy.
Don’t Wait to Start Planning
You don’t have to wait for the COLA announcement to begin researching these alternative sources of retirement income. If you believe that one or more of these strategies could enhance your quality of life during retirement, now is the perfect time to start looking into them.
Key Strategies to Supplement Your Retirement Income
- Withdraw from Personal Savings: If necessary, consider withdrawing more funds from your personal savings to cover your expenses.
- Part-Time Work: Taking on a part-time job can provide additional income and keep you active.
- Rent Out Properties: If you own real estate, renting out properties can be a lucrative way to boost your income.
By exploring these options and planning ahead, you can better manage your finances and enjoy a more comfortable retirement.