All beneficiaries can know how much their monthly Social Security benefit will increase as time ticks closer. There are less than two weeks until the final piece is in place to calculate the percentage that affects all Social Security programs. The Social Security Administration’s 2025 revisions have raised concerns in the news.
Everyone knows that budget restrictions have made it hard for the system to manage and pay its beneficiaries. The pyramid-like Old Age, Survivors, and Disability Insurance (OASDI) systems depend on the number and contributions of the “base” to function.
However, demographic trends in all modern countries imply that birth rates will not increase soon, straining the system as fewer new Americans work and pay Social Security taxes.
Therefore, the pressure on the SSA administrator to discover new ways to generate the cash flow needed to fund each Social Security check will increase government budget demands and indirectly affect how present benefits are modified over time. You must grasp the current procedure to understand how this could happen. Read on for that.
How is the Social Security Check increase determined?
The cost of living adjustment, or COLA, is the amount that is added to each Social Security check. As the name suggests, this is the ratio that the Social Security Administration uses to decide when to raise payouts and other values.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is also used in the process of figuring out the COLA, which changes each Social Security check for the next year.
A lot of different things and services are tracked to see how their prices change over time. This is what the CPI-W is all about. Then, these values are given more or less importance based on how families who make at least half of their money from pay or salaries like to spend their money and what they think is most important.
Every month, the Bureau of Labor Statistics (BLS) releases the CPI-W. For COLA reasons, the SSA takes the average of the numbers from the third quarter of the year (July, August, and September) and compares them to the same numbers from the previous year. The COLA for the next year is shown by this change.
The BSL has said that the CPI-W will be released on October 10 this year. Because of this, the new COLA value should be released in the second or third week of October. This will cause all Social Security checks to change in January 2025.
Keep in mind that the COLA raise will also have an effect on other values managed by the SSA. These include the monthly limits on earnings and assets for Supplemental Security Income, the maximum Social Security benefit at full retirement age (FRA), and the SSI student exclusion amount, among others.
What is the estimated increase of the Social Security Check for this year?
The Senior Citizens League (TSCL) says that the COLA for next year will be about 2.5%, which is a lot less than the 3.2% that was put in place in 2024. This is in line with the idea that inflation will be lower in the US economy as a whole. With this number in mind, the average Social Security check could go up by $48 a month, for a total bonus of $1,968.
This may seem low, but it is actually within the index’s 20-year average. This has big effects on every person who gets Social Security: their spending power will be less affected than in recent years, and inflation will have less of an effect the following year.