U.S. citizens receiving Social Security benefits could be receiving a 3.2% raise next year, according to an estimate based on Wednesday’s inflation result, April’s consumer price index rose 3 .4% over the past year, moderating slightly from 3.5% in March, but still above the Federal Reserve’s 2% inflation target.
Each year’s Social Security cost-of-living adjustment is based on a subset of the general inflation index called the Consumer Price Index for Urban Wage Earners and Office Workers, known as CPI-W, which also increased 3.4% in the last year.
The Social Security Administration is going to announce the actual COLA for the year 2025 in October, when the third quarter inflation data is complete.
The increase will be equal to the percentage increase in the average level of the CPI-W for the third quarter of 2024, with respect to the average for the same period in 2023.
A $60 Boost on Your Social Security Checks
A 3.2% increase will add about $60 to the average Social Security retirement benefit of $1,866 per month, however, a projected increase in Medicare Part B premiums could significantly reduce the increase, says Mary Johnson, independent Social Security and Medicare policy analyst and author of the COLA projection.
In the annual report, the Medicare Trustees made an estimate that the standard monthly Part B premium could increase to $185 next year, up 5.9% from this year’s $174.70, Part B premiums, which are automatically deducted from Social Security checks, are one of the fastest-growing costs in the retirement, Johnson said.
Both Medicare and Social Security are in a not very stable financial situation. The Social Security Trustees recently projected that the program’s retirement trust fund would run out of cash by 2033 if Congress does not take action before that date to make changes, if the trust fund runs out, the payroll taxes coming in would be enough to cover a projected 79% of already scheduled benefits.
COLA reductions are one solution that has been proposed to consolidate Social Security, combined with tax increases and benefit reductions for future generations.
How Does SSI work And Who Qualifies?
Supplemental Security Income (SSI) provides monthly payments to people, those who have reduced or no income, disabled people or older adults, 65 years of age or older, these are the requirements stipulated by the Administration, generally SSI is for people who earn no more than $1,971 from their job monthly.
Your resources must not exceed $2,000 for single people or $3,000 for couples. (If you are a parent applying for a child, these numbers increase by $2,000).
For people under age 64, you must have a disability that affects your ability to do work for a year or more, results in death, or severely limits your daily activity (for children with disabilities). You must also show that your income is less than $1,550 monthly in the month you apply.
