Starting in January 2025, Social Security benefits will reflect the new Cost of Living Adjustment (COLA). This adjustment is added every year to help Social Security beneficiaries keep up with inflation and rising costs. The COLA increase for 2025 is estimated to be around 2.5%, meaning that beneficiaries will receive a little more each month to help with daily expenses. For those who receive Supplemental Security Income (SSI), the payment will arrive even earlier—on December 31, 2024—due to New Year’s Day falling on a holiday.
Let’s look at what these changes mean, including key dates, expected payment amounts, and planning tips for retirees.
What is COLA and Why is it Important?
COLA (Cost of Living Adjustment) helps Social Security recipients maintain their purchasing power each year by adjusting their benefits to match inflation. This increase applies to both Social Security retirement benefits and Supplemental Security Income (SSI) payments. Without COLA, retirees would face a tougher time covering daily expenses as costs rise.
When Will the First Payment with COLA for 2025 Arrive?
January 2025 Social Security benefits with COLA will arrive earlier for SSI recipients, with the first payment due on December 31, 2024. Typically, payments are made on the first of each month, but if that date falls on a holiday or weekend, payments are issued on the preceding business day.
How Much Will the COLA Increase Be in 2025?
While the official rate has not yet been confirmed, early predictions estimate a 2.5% increase in Social Security benefits. For instance, if someone currently receives the maximum monthly SSI benefit of $943, they can expect an increase of about 2.5%, providing a small but helpful boost to their income.
Budgeting Tips for Retirees in 2025
As COLA provides a slight increase in benefits, budgeting wisely can help stretch these payments further. Here are a few tips:
- Calculate Your After-Tax Income: Know your spending limits.
- Budget for Essentials: Housing, food, and transportation costs should be prioritized.
- Set Aside Savings: Prepare for unexpected expenses each month.
- Track Spending: Reviewing your budget regularly can help spot areas for improvement.
Key Dates for Social Security Beneficiaries
- December 31, 2024: First SSI payment with 2025 COLA.
- January 1, 2025: Official start of 2025 benefits with new COLA.
- January 2025: Social Security payments reflect COLA increase.
Staying informed about these dates and planning ahead can help beneficiaries make the most of their benefits in the new year.
FAQ’s
When will the first 2025 Social Security payment with COLA be made?
On December 31, 2024, SSI recipients will receive the first payment with the 2025 COLA increase.
What is the expected COLA increase for 2025?
The COLA for 2025 is estimated at 2.5%, though this rate is not yet official.
Why does Social Security offer COLA adjustments?
COLA helps beneficiaries keep up with rising costs, ensuring they can afford basic needs despite inflation.