Good news for retirees! The Social Security Administration (SSA) has announced a 2.5% cost-of-living adjustment (COLA) for 2025, meaning an average monthly benefit increase of roughly $50. This adjustment, set to take effect in January, aims to help Social Security payments keep pace with rising living costs.
However, while this increase may sound promising, many retirees might find their net benefit increase is less than the advertised 2.5%. This is because Medicare Part B premiums, automatically deducted from Social Security payments, are also expected to rise. While the exact premium rates for 2025 haven’t been confirmed yet, estimates suggest a jump from the current $174.70 to around $185 per month, potentially exceeding the Social Security increase.
This means that despite the adjustment, some beneficiaries might see their disposable income shrink due to the higher Medicare premiums.
To find out your specific benefit increase, retirees can log into their “my Social Security” account starting in early December. Make sure you create your online account by November 20 to access COLA notices online. For those without online accounts, the SSA will mail physical notices detailing new benefit amounts and any deductions beginning in December.
While the COLA provides some relief, many retirees are concerned that it might not be enough to counter the full impact of inflation, especially in areas like healthcare where costs are escalating rapidly. The SSA’s calculation method for COLA, which uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), has been criticized for underestimating the rising costs of healthcare for seniors.
As we move into 2025, it remains to be seen whether the Social Security increase will truly provide much-needed support to retirees grappling with rising costs, particularly in the healthcare sector.