For retirees in the United States who rely on Social Security, staying informed about program updates and important dates can help manage finances more effectively. This program has specific aspects that change annually, especially adjustments to keep up with the cost of living. As the end of 2024 approaches, some key dates are worth noting, particularly for those eager to know their benefits in 2025 and plan accordingly.
Each October, the Social Security Administration (SSA) announces the annual cost-of-living adjustment (COLA) to account for inflation. This year, the COLA for 2025 is set at 2.5%, the smallest increase in the past four years.
The 2.5% increase in Social Security benefits for 2025
The COLA aims to help retirees maintain their purchasing power by counteracting inflation’s impact. While recent years saw larger adjustments due to high inflation rates, inflation has moderated in 2024, resulting in a more modest increase for 2025. In practice, this adjustment means that the average monthly benefit will rise from $1,921 to roughly $1,969, equating to an annual income of $23,628.
However, each retiree’s actual amount depends on several factors, including when they started receiving benefits, their years of work, and their lifetime earnings.
Why November 20 is an important date for retirees
This year, November 20 holds special importance for all retirees receiving Social Security benefits. The reason is straightforward: retirees are encouraged to create a personal account on the SSA’s online portal, “my Social Security,” by this date. This account is free and allows users to manage and check all benefit-related information.
By setting up this account before November 20, retirees can access the COLA increase notification for 2025 directly online.
From early December, each beneficiary will be able to see exactly how much their payments will increase beginning in January, enabling them to plan their next year’s budget more accurately.
Benefits of having a my Social Security account
Having a my Social Security account offers several advantages beyond just receiving notifications about benefits. This platform simplifies a variety of tasks that can be helpful for retirees. Through this account, beneficiaries can:
- Request a replacement Social Security card
- Access the 1099 form for tax purposes
- Check the status of any application
- Estimate future benefits if they have not yet started receiving them
- Manage current benefits securely
Overall, this account simplifies benefit management and helps users stay informed about updates, reducing potential delays or lapses in information.
The impact of Social Security on retirees’ income
Social Security serves as a crucial source of income for the majority of retirees. According to SSA data, nearly 90% of people over age 65 receive some form of Social Security benefit. These payments make up about 30% of the total income for retirees on average, though in some cases, Social Security plays an even more critical role.
In fact, approximately 37% of men and 42% of women receiving benefits rely on Social Security for at least half of their income. For others, Social Security constitutes nearly all their income, covering up to 90% of their earnings for about 12% of men and 15% of women.
With these numbers in mind, each year’s COLA increase directly affects many retirees’ quality of life, making it important to know the precise monthly benefit amounts to anticipate expenses and adjust the household budget.
How the COLA and other key dates aid in planning for the year
For any retiree, knowing how much Social Security will increase in the coming year is valuable information for financial planning. With this year’s 2.5% COLA, some retirees may find the increase useful for covering additional expenses or setting aside funds for unforeseen needs.
It’s worth remembering that, even though this year’s increase is more modest, the annual adjustment ensures Social Security benefits retain their value against the cost of living, particularly in an inflationary environment. Additionally, dates like November 20 and notifications through my Social Security help retirees stay updated, ensuring they have the information they need to keep their benefits up-to-date and in good order.