Less inflation means fewer increases in Social Security payments. (iStock)
According to the Social Security Administration (SSA), Social Security and Supplemental Security Income (SSI) benefits for more than 71 million Americans will increase by 2.5% in 2025, resulting in an additional $561 in Social Security income per year. This is expected to increase.
Beneficiaries will receive an additional $50 monthly benefit starting in January, according to the latest SSA. statement. Increased payments to approximately 7.5 million SSI recipients will begin on December 31, 2024. Over the past 10 years, the cost of living adjustment (COLA) has increased by approximately 2.6%. The COLA for 2024 was 3.2%. Social Security COLAs are based on the Consumer Price Index for Urban Wage and Office Workers (CPI-W).
Increase in 2024 will help millions of people Social Security Secretary Martin O'Malley says spending will need to continue to be maintained even as inflation eases closer to the 2% target level set by the Federal Reserve. Still, the adjustment amount is lower than in previous years as inflation has eased. The amount recipients will receive will increase by 3.2% in 2024 and 8.7% in 2023, the largest increase in payments since the early 1980s due to record high inflation.
“Inflation last year took a financial toll, especially on retirees who often rely on Social Security as their primary source of income,” AARP CEO Jo Ann Jenkins said in a statement. Ta. “Even with this adjustment, we know that many older Americans who rely on Social Security may have difficulty paying their bills. It is the main source of income for 40% of people.
But Jenkins said more needs to be done to strengthen Social Security and ensure long-term solutions Americans can rely on.
If high-interest debt is impacting your retirement savings, consider paying it off with a lower-interest personal loan. Visit Credible to talk to experts and get your questions answered.
Average US credit card debt in 2024
Group call for senior CPIs
Many Americans are deeply concerned about the impact of inflation on their retirement savings and whether they will be able to make ends meet with their Social Security retirement income. Social Security recipients have lost about 20% of their purchasing power since 2010, according to the annual report. the study By the Senior Citizens League (TSCL).
TSCL and executives are asking Congress to begin calculating COLAs based on the Consumer Price Index for Americans 62 and Over (CPI-E) rather than CPI-W. The CPI-E is generally higher than the CPI-W because it examines expenses for retired households age 62 and older and more accurately describes how older Americans spend their money. Seniors and disabled Social Security recipients spend a significant portion of their income on housing and health care, two spending categories that tend to rise faster than overall inflation. TSCL also called on Congress to enact a minimum 3% COLA.
“This year, we are once again missing an opportunity to give older adults the financial relief they deserve by changing COLA calculations from CPI-W to CPI-E. It will be reflected appropriately,” said TSCL Executive Director Shannon Benton. statement. “Seniors and TSCL demand that Congress take immediate action to strengthen COLAs so Americans can retire with dignity. Our research shows that 67% of seniors “They rely on Social Security for more than half of their income, and 62% worry they won't have enough income in retirement to cover even basic necessities like groceries and medical bills.” ”
If you want to reduce your monthly expenses, consider paying off high-interest debt with a lower-interest personal loan. Visit Credible to speak with a personal loan expert and see if this option is right for you.
Best Personal Loans in October 2024
Increase in tax base amount
Another adjustment that will take effect in January will affect a portion of personal income. social security tax. This is expected to increase from $168,600 in 2024 to $176,100 in 2025. This means that beneficiaries earning more than $178,100 in 2025 will have to pay Social Security payroll taxes on the amount of income above that limit.
Unlike other parts of the federal income tax law, the taxable income threshold for Social Security benefits is not adjusted for inflation. As a result, as COLA increases Social Security income, more retirees may reach the tax threshold for Social Security benefits.
If you're retired or preparing to retire, paying off your debt with a personal loan can reduce your interest rates and monthly expenses. Visit Credible to compare multiple personal loan providers in one place and choose the one with the best interest rate.
How to pay off debt faster: 5 strategies
Have a finance-related question but don't know who to ask? Email it to your trusted money expert. Moneyexpert@credible.com Your questions may be answered in Credible's Money Expert column.
