Bigger Social Security Checks Coming in January – Great News for Retirees and Seniors

With the holiday season approaching, many retirees and public assistance recipients are planning how the 2025 cost-of-living adjustment (COLA) will impact their finances. Set to take effect in January, this annual adjustment helps Social Security benefits keep pace with inflation. However, with a modest increase this year, many beneficiaries are concerned about whether the COLA will adequately address their needs.

Let’s take a closer look at the COLA, how it’s calculated, and its impact on Social Security checks for 2025.

COLA

Announced on October 10, the 2.5% COLA will be applied to all Social Security benefits starting January 2025. This includes retirement, survivors, Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI) programs. The percentage adjustment applies uniformly across all programs, regardless of the benefit amount.

The goal of the COLA is to maintain beneficiaries’ purchasing power in the face of rising inflation. While this year’s adjustment is an improvement, it’s significantly lower than the increases seen in recent years. Many beneficiaries are disappointed, especially after the 2024 COLA failed to keep pace with inflation, leaving retirees struggling to afford essentials like groceries and healthcare.

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Concerns

The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks price changes in goods and services. However, senior advocates argue this index does not reflect the spending habits or needs of retirees.

Seniors typically face higher expenses in areas like healthcare and housing, which are less emphasized in the CPI-W. This disconnect leaves many struggling to cover essentials, as highlighted by research from the Senior Citizens League (TSCL):

• 67% of seniors rely on Social Security for more than half their income.
• 62% worry their benefits won’t cover basic expenses.

TSCL has called for the adoption of a more senior-focused index, such as the Consumer Price Index for the Elderly (CPI-E). This alternative measures the same goods and services but gives greater weight to healthcare and housing costs. Using the CPI-E would likely result in higher COLAs, offering better support to seniors and other vulnerable populations.

Bigger Picture

While seniors are most vocal about the inadequacy of the COLA, they’re not alone in their concerns. Many vulnerable groups, including recipients of food assistance and disability benefits, share similar struggles. Switching to the CPI-E could provide a more equitable solution by addressing the unique needs of all beneficiaries.

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Beneficiaries

For those curious about how the COLA will affect their benefits, the Social Security Administration (SSA) will send personalized notices in the coming weeks. Beneficiaries with a my Social Security account can view these adjustments online.

Here’s a quick example of how the 2.5% adjustment might translate:

Average Benefit	2024 Amount	2025 Amount	Increase
Retiree Benefit	$1,907	~$1,954	~$47
SSI Benefit	$914	~$937	~$23

While these increases are small, they do provide some relief. Beneficiaries should also keep in mind that programs like Medicare and SNAP use COLA adjustments to update their benefits, making it an essential metric for a wide range of public assistance.

Planning Ahead

Although the 2025 COLA falls short of expectations, knowing its impact can help beneficiaries plan effectively. If you haven’t already, consider setting up a my Social Security account to track your benefits and access updates. Staying informed is the best way to ensure you’re prepared for the changes ahead.

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