Check out the latest updates on the Social Security COLA Increase 2025: 2 Big Changes Coming in Social Security Next Year Here. As 2024 progresses, it is important for current and future retirees to be aware of the upcoming changes to the Social Security benefits in 2025. These changes would impact when you can claim benefits and how much you will get.
Social Security COLA Increase 2025
Millions of retirees are in the hope that the Cost Of Living Adjustment will bring about a remarkable rise in Social Security Payment. In the United States, Social Security recipients get their monthly benefits adjusted periodically to align with the rising cost of living. If you are nearing retirement, consider your options for when to start claiming the retirement benefits.
In the upcoming year, the Social Security Social Security COLA Increase will receive an enhanced payout of $49 per month. We cannot neglect the fact that millions of seniors in America rely on Social Security payments to manage their daily expenses. The two major changes in 2025 would be the increased FRA and reduced COLA, emphasizing the need to be careful with financial planning.
2 Big Changes Coming in Social Security Next Year
One of the most significant changes is the increase in the Full Retirement Age. The FRA is the age at which you can claim Social Security benefits without any cuts for early retirement or increases for delaying retirement. Planning beforehand is the only solution to alleviate the financial effect of these shifts.
Another change is the likely decrease in the Cost of Living Adjustment for the next fiscal year. COLA is an annual increase in the benefit based on inflation. Recent years have seen higher COLAswith increases of 5.9% in 2022, 8.7% in 2023, and 3.2% in 2024. However, the data shared by most of the experts suggest that the COLA for 2025 will be around 2.7%.
How Much Will Be The COLA Increase In 2025?
With 2.7% of COLA, requires might need to adjust their budgets. The reduction in the COLA means the retirees will see a small increase in their benefits compared to recent years. It is time to review your expenses and find ways to reduce costs to accommodate smaller increases in benefits. Read the table to know the rate of inflation in the COLA.
| Fiscal Year | Increase in COLA |
| 2025 | 2.7% |
|---|---|
| 2024 | 3.2% |
| 2023 | 8.7% |
| 2022 | 5.9% |
| 2021 | 1.3% |
COLAs are based on the inflation rates, but the index utilized to calculate them does not always match the actual spending pattern of the pensioners, who often face the high costs of healthcare and other essentials. As an outcome, benefits have lost purchasing power over time.
All We Know
Presently, if you turn 66 in 2024, your FRA is 66 years and eight months. But if you turn 66 in 2025, your FRA would be 66 years and ten months. Whereas those tuning to 66 in 2026, the FRA will be 67 years old. This change means that if you want to avoid early retirement penalties, you will need to wait until your FRA to start receiving the benefits.
Individuals who claim FRA a month before will face a reduction of 5/9 of 1 % for the first 36 months you claim early. The increase in the FRA means you might have to work a few extra months or accept a reduced benefit if you claim early. We want to inform you that the SSA generally publicizes the adjustment in the second week of October.
