The Social Security Administration announced changes to all benefits just a few days ago. Beneficiaries buzzed with excitement over this forthcoming update to see how their monthly checks would be changed.
Right now, the highest-paid Social Security recipients receive a monthly check of over $4,000, or over $58,000 a year. In 2025, this figure will rise. Beginning in January, these recipients will get the same cost of living adjustment (COLA) that all others enjoy.
2025 COLA increase for Social Security
If COLA’s are a percentage, then every recipient’s check will go up proportionately. Thus, those who receive the largest payments presently will enjoy the greatest dollar amount increases. But the rise may not be as big as you might think.
The Senior Citizens League (TSCL) was right on the money. The 2025 Social Security COLA will be 2.5%. That means, for those getting the maximum benefit now, they would add $235 to the monthly payments, which would put it up to $5,108 a month. That adjustment works out to an added $2,820 a year.
It often feels like a drop in the bucket for those folks who are receiving the largest Social Security checks. The highest income that is subject to Social Security taxes amounts to $176,100 for 2025 (and increases annually with inflation); to have the highest Social Security benefit that you can draw, you’ll want to work or earn the most of this amount for at least 35 years.
Also, you have to postpone your Social Security benefit filing up until age 70. None of that is easy to achieve. Normally, this is the head of household that is not financially strapped and can certainly afford to make ends meet with or without Cost of Living Adjustment (COLA).
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Changing Landscape for Top Social Security Earners
Interestingly, those who are at the top of the Social Security earnings list may not remain at the top indefinitely. The Social Security Formula changes each year and so the maximum Social Security benefit also changes incrementally.
That means a new group of high-earning 70-year-olds will be happily receiving larger than ever checks very soon. But they do not know exactly how much until the Social Security Administration shows the maximum benefit for 2026. Typically, this announcement is in tandem with a COLA update.
Also Read: SSI Check Up To $1,415: When Will You Get It Before 2025 COLA?
The COLA Increase for Social Security in 2024
For December, the estimated monthly average Social Security benefit is $1,927. If a Cost of Living Adjustment (COLA) of 2.5% is granted, monthly benefits would come to $1,976—a mere $49 change. However, that may not be enough to match the worsening living expenses retirees continue to face.
The Official COLA Announcement
The official COLA rate was announced on October 10, 2024. With this, you can work out what your future benefit checks will be if you apply the COLA percentage to your current checks.
In December, the Social Security Administration will also mail you a notice that includes your exact benefit amount for 2025. If you don’t want to put in the work or wait to get the notice that comes by mail, you can use your Social Security account.
FAQs
Q. What is the Social Security COLA for 2025?
A. The Social Security Administration (SSA) typically announces the COLA for 2025 in October 2024, based on the United States Bureau of Labor Statistics (BLS) measure of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Q. How does the COLA affect Social Security benefits?
A. Starting in 1975, the COLA is to keep Social Security benefits in line with inflation as the price of the goods and services covered by the program increases. When a COLA is used, the monthly benefit amount for living retired, disabled people and survivors is increased.
Q. Who qualifies for the COLA adjustment?
A. The COLA applies to all Social Security recipients, including all retirees, disabled workers and survivors of deceased workers. The adjustment also applies to Supplemental Security Income (SSI) recipients.
Q. Why is the COLA important for Social Security beneficiaries?
A. The COLA is a good thing, as it helps ease them from inflation. Fixed benefits could become eroded over time, leaving beneficiaries without the power to afford their basic necessities without periodic adjustments.
Q. Where can I find updates on the 2025 COLA announcement?
A. Information about the COLA and other Social Security news is available on the SSA’s official website and via government publications. If tracked, these channels will announce first and most accurately; with that being said, announcements can be made in October or later.