Moderate inflation means smaller increases in Social Security benefits. (iStock)
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 over the course of the year, according to the Social Security Administration (SSA).
Recipients will receive $50 more per month starting in January, according to recent SSA statement. Increased payments to approximately 7.5 million SSI recipients will begin on December 31, 2024. Over the past decade, the cost of living adjustment (COLA) has increased by approximately 2.6%. The COLA was 3.2% in 2024. The Social Security COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The increase in 2024 will help millions of people track your expenses, even if inflation has moderated closer to the 2% target level set by the Federal Reserve, according to Social Security Commissioner Martin O’Malley. The adjustment is nevertheless lower than in previous years due to moderate inflation. Beneficiaries received increases of 3.2% in 2024 And 8.7% in 2023the largest increase in payments since the early 1980s due to record inflation.
“Inflation has taken a financial toll last year, particularly on retirees, who often rely on Social Security as their primary source of income,” Jo Ann Jenkins, AARP executive director, said in a statement. . “Even with this adjustment, we know that many older Americans who rely on Social Security may struggle to pay their bills. Social Security is the primary source of income for 40% of older Americans.”
However, Jenkins said more needs to be done to strengthen Social Security and ensure a long-term solution Americans can count on.
If high-interest debt is affecting your retirement savings, consider paying it off with a personal loan with a lower interest rate. Visit Credible to speak with an expert and get answers to your questions.
AVERAGE CREDIT CARD DEBT IN THE UNITED STATES IN 2024
The group calls for a senior CPI
Many Americans are deeply concerned about the impact of inflation on their retirement savings and their ability to make ends meet on Social Security retirement income. Social Security recipients have lost about 20% of their purchasing power since 2010, according to an annual report. research by the Seniors League (TSCL).
TSCL and seniors want Congress to start calculating the COLA based on the Consumer Price Index for Americans 62 and Older (CPI-E) instead of the CPI-W. The CPI-E is generally higher than the CPI-W because it studies costs for retired households over age 62 and more accurately reports how older Americans spend their money. Elderly and disabled Social Security recipients spend a significant portion of their income on housing and medical costs — two spending categories that tend to rise faster than overall inflation. TSCL also called on Congress to establish a minimum COLA of 3%.
“This year represents another lost opportunity to give seniors the financial assistance they deserve by changing the COLA calculation from CPI-W to CPI-E, which would better reflect the evolution of seniors’ spending,” said said Shannon Benton, executive director of TSCL, in a statement. statement. “Seniors – and TSCL – are demanding that Congress take immediate action to strengthen COLAs to ensure Americans can retire with dignity. Our research shows that 67% of seniors rely on Social Security for more than half of their income and 62% worry about their retirement income being unearned. “I don’t even cover essentials like groceries and medical expenses.”
If you’re looking to reduce your monthly expenses, you might consider paying off your high-interest debt with a personal loan at a lower interest rate. Visit Credible to speak with a personal loan expert and see if this option suits you.
BEST PERSONAL LOANS FOR OCTOBER 2024
Increase in the tax threshold
Another adjustment that will come into effect in January concerns the portion of personal income subject to Social Security Tax. This amount is expected to increase to $176,100 in 2025, up from $168,600 in 2024. This means that beneficiaries who earn more than $178,100 in 2025 will have to pay Social Security payroll taxes on the amount of their income above this limit. .
Unlike other parts of the federal income tax code, the income thresholds that subject Social Security benefits to taxation have never been adjusted for inflation. Therefore, as Social Security income increases through COLAs, more retirees can reach the thresholds that trigger taxes on their Social Security benefits.
If you’re retired or preparing to retire, paying off debt with a personal loan can help lower your interest rate and lower your monthly expenses. You can visit Credible to compare multiple personal loan lenders in one place and choose the one with the best interest rate for you.
HOW TO PAY OFF DEBT QUICKLY: 5 STRATEGIES
Do you have a question relating to finance, but you don’t know who to ask? Email the credible money expert at moneyexpert@credible.com and Credible could answer your question in our Money Expert column.
