For U.S. retirees who depend on Social Security, staying updated on the program’s changes and key dates is vital for effective financial planning. As the year 2024 wraps up, retirees should focus on several important updates, including the 2025 cost-of-living adjustment (COLA) and specific deadlines like November 20. Here’s what you need to know to plan for the year ahead.
2.5% COLA for 2025
The Social Security Administration (SSA) has announced a 2.5% COLA for 2025, marking the smallest adjustment in four years. This change reflects moderated inflation rates in 2024 compared to prior years.
For retirees, the COLA translates into a modest increase in monthly benefits. The average monthly payment will rise from $1,921 to approximately $1,969. Over the course of the year, this adjustment adds up to an annual benefit of $23,628. However, actual payment amounts vary based on factors like work history, earnings, and the age at which benefits were first claimed.
November 20
One critical date for Social Security beneficiaries is November 20, 2024. By this date, retirees should set up a my Social Security account on the SSA’s online portal. This free tool is invaluable for managing benefits and accessing important updates.
By registering an account before November 20, beneficiaries can view their exact COLA-adjusted benefits as early as December. This allows retirees to budget more effectively for the upcoming year.
Benefits
Creating a my Social Security account offers retirees numerous advantages beyond just viewing COLA updates. Through this portal, users can:
- Request replacement Social Security cards.
- Access the 1099 form for tax filings.
- Check the status of pending applications.
- Estimate future benefits for those not yet claiming.
- Manage current benefits securely and efficiently.
These features simplify benefit management and ensure timely access to crucial information.
Role of Social Security
Social Security is a vital income source for many retirees. According to SSA statistics:
- Nearly 90% of Americans over 65 receive Social Security benefits.
- On average, Social Security constitutes about 30% of retirees’ income.
- For some, benefits are indispensable:
- 37% of men and 42% of women rely on Social Security for at least half their income.
- For 12% of men and 15% of women, benefits provide 90% or more of their earnings.
These figures highlight why understanding COLA adjustments and maintaining benefit access are essential for financial stability.
Planning with the COLA
While the 2.5% COLA for 2025 is modest, it still helps retirees combat inflation and maintain purchasing power. The increase can assist with rising costs or allow retirees to set aside extra funds for emergencies.
By leveraging tools like my Social Security and keeping track of key dates, retirees can make informed decisions about their finances. Even though this year’s COLA is smaller, its importance lies in ensuring benefits retain their value over time.
For retirees, addressing these adjustments and deadlines is the first step toward proactive financial planning in 2025 and beyond.
FAQs
What is the COLA for 2025?
The 2025 COLA is 2.5%, raising average monthly benefits to $1,969.
Why is November 20, 2024, important for retirees?
It’s the deadline to create a my Social Security account for timely updates.
How can a my Social Security account help retirees?
It allows users to manage benefits, access tax forms, and check updates.
How much income does Social Security provide for retirees?
It averages 30% of retiree income but can account for 90% for some.
When will the COLA adjustments take effect?
The COLA changes will reflect in January 2025 benefit payments.
