Social Security Confirms A New Check Increase In 2024 – Here’s Exactly When :- Over 51 million retired workers who depend on Social Security got an average monthly payment of $1,918.28 in June. This is a little more than $23,000 a year.
Even though this amount might not seem like much, Social Security has been an important source of income for retirees for decades, helping them pay their bills.
A big part of cutting poverty has been Social Security. It raised 22.7 million people above the government poverty line in 2022 alone, including 16.5 million adults aged 65 and up.
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Polls done by Gallup every year for the past 23 years show that between 80% and 90% of retirees rely on their Social Security benefits to meet their financial needs.
Because of this, it makes sense that beneficiaries are looking forward to hearing about the annual cost-of-living increase (COLA) in October.
Even though some people think the 2025 COLA could be historically important, many users may still not be satisfied with it.
The impact of the COLA on Social Security
But why is the COLA for Social Security so important for retirees? Prices for goods and services change over time. The COLA’s job is to make sure that retirees don’t lose their buying power by adjusting their benefits every year to keep up with these changes.
Before 1975, these changes weren’t made in a planned way. That year, Social Security started using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to track inflation and make changes to payments based on that.
The CPI-W has a lot of different spending groups and subcategories, and each one has its own weighting. Because of these weightings, the CPI-W can be given as a single number every month, which makes it easy to compare to months or years past.
Only CPI-W numbers from the third quarter of the year (July through September) are used to figure out the COLA.
If the average CPI-W for the third quarter of this year is higher than it was for the same quarter last year, there has been inflation, which means that Social Security payments will go up.
The increase in benefits for the next year is based on the percentage rise in the average CPI-W for the third quarter, rounded to the nearest tenth of a percent.
Because inflation has been higher than usual, COLAs have been very high over the last three years. In the past 15 years, COLAs have been small or nonexistent most of the time. However, in 2022, 2023, and 2024, they were 5.9%, 8.7%, and 3.2%, respectively.
In 2023, monthly payments went up by 8.7%, which was the biggest increase in 41 years and the biggest nominal increase since the program began.
It was after the June inflation report from the U.S. Bureau of Labor Statistics that projections for the 2025 COLA were made better.
The Senior Citizens League (TSCL), a nonprofit group that advocates for seniors, thinks that the rate will go up by 2.63%, which is probably close to 2.6%. Until then.
An expert Social Security and Medicare policy analyst named Mary Johnson has predicted a 2.7% rise. To the 51.2 million retired workers who will be getting help.
In 2025, a 2.6% to 2.7% COLA would add an extra $49.88 to $51.79 per month, putting the average monthly benefit close to, but still below, $2,000. For other people who need it, like.
If the COLA stays the same, the monthly checks for the 7.2 million workers with disabilities and the 5.8 million survivor benefits would go up by $39.98 to $41.52 and $39.20 to $40.71, respectively.
A fourth year in a row of above-average COLAs may seem like good news at first glance, but retirees should be worried about the reasons behind these raises.
Americans of working age and seniors spend their money in different ways. The CPI-W, which has been used for almost 50 years to figure out the COLA for Social Security.
Keeps track of the buying habits of wage earners and office workers in cities. These are mostly adults of working age who do not get Social Security benefits.
This difference means that the index doesn’t properly show how much inflation seniors, who make up 86% of Social Security’s nearly 68 million recipients, have been experiencing.
One big problem for retirees is that the cost of housing and medical care has continued to rise quickly.
The Consumer Price Index for All Urban Consumers (CPI-U) showed that the most recent 12-month inflation rates for housing and medical care were 5.2% and 3.3%, respectively, in June.
Even if the 2025 COLA comes in at 2.7%, which is what Mary Johnson predicted, it would still be less than the inflation seniors face in these important areas of spending.
Most people who get Social Security would lose spending power because of this difference. This is the latest in a long line of problems that has been happening with Social Security income since the turn of the century.
