Will Social Security beneficiaries receive extra money starting in January 2025?

Social Security beneficiaries eagerly await the start of each year to learn about potential increases in their monthly payments. For 2025, the Cost of Living Adjustment (COLA) remains a focal point. But will recipients actually receive extra money starting in January?

Understanding COLA adjustments

The Social Security Administration (SSA) applies the COLA to ensure payments keep pace with inflation. This adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), measured from the third quarter of one year to the next. The COLA for 2025 was announced in October 2024 at 3.2%, which, while smaller than the 8.7% increase seen in 2023, will still lead to a modest rise in payments.

What Does This Mean for Beneficiaries?

The average monthly Social Security payment in 2024 is around $1,850. With a 3.2% COLA, beneficiaries could see an average increase of approximately $59 starting January 2025. While not a dramatic boost, it does provide some relief to those grappling with the rising cost of essentials such as food, housing, and healthcare.

Is it “extra money”?

Although often perceived as a bonus, the COLA is not “extra” money but rather an inflationary adjustment. Its purpose is to preserve the purchasing power of Social Security benefits amidst rising prices. It’s also worth noting that the COLA adjustment impacts Supplemental Security Income (SSI) recipients, providing them with a similar percentage increase.

Key takeaways for beneficiaries

While the 2025 COLA increase is smaller than recent years, any additional funds will help counteract inflationary pressures. Beneficiaries are encouraged to review their payments through the SSA website or contact the administration directly for personalized details about their benefits.

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