Until mid-October, we won’t know how much the COLA increase will be, but we already know how Social Security will change next year. Important changes are coming in the benefits and payments that the Social Security Administration pays to millions of beneficiaries across the United States, including retirees, disabled individuals, and survivors.

We must highlight that there are several programs and several types of affected populations. Those who think this only impacts retirees are quite mistaken. The majority of those who are currently working and fall within certain age ranges are thinking about accumulating enough Social Security credits to claim retirement payments once they reach their full retirement age (FRA), which is the age at which they are paid 100% of the amounts they are entitled to.

When Do Social Security Benefits Increase?

In the United States, Social Security benefits increase starting from January 1st each year. This increase is known as the Cost of Living Adjustment, abbreviated as COLA. The COLA is based on inflation and is designed to ensure that benefit recipients maintain their purchasing power as prices rise due to annual inflation.

The COLA increase will be announced in mid-October 2024, after the SSA has analyzed the inflation data from July, August, and September, which is the third quarter of the year. The weighted data from this quarter is compared to the same period from the previous year, and if an increase is observed year-over-year, that percentage translates into an increase in Social Security benefits.

This increase applies to all Social Security beneficiaries, including retirees, people with disabilities, and survivors receiving payments from deceased beneficiaries.

Social Security Cost of Living Adjustment Likely to Be Lower in 2025

In the last year of Joe Biden’s administration, inflation has been slowing down and decreased for the fourth consecutive month to 2.9% in July. This decrease also impacts the COLA increase forecasts made by experts, and it is expected that benefits will increase based on this adjustment, around 2.57%. This figure is particularly lower than the 3.2% granted for 2024 and much lower than the 8.7% granted for 2023.

While it’s true that lower inflation puts less pressure on household incomes across all American homes, this doesn’t mean that prices are falling but rather that they are rising at a much slower pace.

Changes in Full Retirement Age (FRA) in 2025

Starting next year, a significant change in full retirement age will be noticeable, which gradually increases based on your birth year.
For example, if you were born between 1955 and 1960, your FRA is 67 years. In 2025, the full retirement age will be 66 years and 10 months. For those turning 66 in 2024, the full retirement age will be 66 years and eight months.
Here’s when you’ll reach your FRA, based on your birth year:

• If you were born in 1958, your FRA is 66 years and six months and was reached in 2024.
• If you were born in 1959, your FRA is 66 years and 10 months and will be reached in 2025.
• If you were born in 1960 or later, your FRA is 67 years and will be reached in 2026 and beyond