The Cost of Living Adjustment (COLA) 2024 will soon be history, as the Bureau of Labor Statistics will announce the new COLA increase for the following year. If Social Security provides more than half of your retirement income, you may want to know what the increase will be in 2025. Unfortunately, you’ll have to wait a little longer. Beneficiaries need to be aware that the Social Security Administration cannot officially release the Social Security cost-of-living adjustment (COLA) for 2025 until October 10. This is because it uses the third quarter inflation data used to generate these COLAs. Additionally, since the third quarter of the year is still ongoing, it’s premature to expect 100 percent accuracy.

Social Security will change after the new COLA announcement in October

Based on the currently available inflation data, forecasts for inflation next year are available. Social Security COLA. Moreover, the most recent estimate puts the 2025 increase at 2.5 percent. Not only is a 2.5% increase the smallest COLA announced since 2021, but it’s also fairly modest to begin with. Since inflation began rising in 2021, Social Security retirees have been getting really high COLAs, so a 2.5% increase may seem even smaller. While the possibility that your COLA will peak at 2.5% in 2025 may not cheer you up, there is a bright side you should know about. Changes in the Consumer Price Index for office workers and wage earners from one year to the next serve as the basis for Social Security COLAs.

Social Security benefits typically rise significantly when inflation rises. Benefits rise less when inflation falls. For 2025, seniors expect the latter scenario. However, a 2.5% Social Security COLA has one small silver lining: It means the cost of living isn’t rising as fast as it used to. But there’s another way to look at it. Your Social security benefits may have increased significantly over the past few years. However, you’ve probably also factored in the increased costs at the pharmacy, grocery store, and pretty much everywhere else. As inflation begins to decline, you may find that you’re spending less on these and other necessities, but that should even out eventually.

Should benefit recipients have alternative sources of income in addition to social security payments?

With no savings and relying solely on social security benefits to pay their bills, many seniors worry about a small Cost of Living Adjustment (COLA) for 2025. But living like that is scary. If you’re retired and find yourself in that situation, taking advantage of gig economy opportunities can be a great way to increase your take-home pay and build an emergency fund. That way, you’ll have a safety net in case of unexpected expenses or sharp increases in inflation before your Social Security benefits can be adjusted.

If you’re not yet retired, be aware of the anxiety existing retirees have about their Social Security COLAs. You don’t want to end up in a situation where you’re dependent on an annual benefit increase to make ends meet. Instead, use your working years to save so you can comfortably supplement your income. Social security income. You won’t have to worry too much about cost-of-living adjustments the following year during retirement if you have a sizable Nest account.

What impact could the 2025 COLA have on Social Security benefits?

As October approaches, millions of pensioners are still waiting for the official publication of the Cost of living adjustmentbecause it depends on how much money they receive starting in January. According to the latest projections, the 2025 COLA could be around 2.57%, which is lower than the current 3.2% increase. If that percentage goes into effect, Social Security benefits for retirees will increase as follows starting in January 2025: