Social Security recipients are quickly approaching a critical deadline that could impact their monthly benefits. The program can be complex with various requirements, making it crucial for retirees to stay informed about important dates.
Most beneficiaries are familiar with the annual Cost of Living Adjustment (COLA), which is typically announced in early to mid-October. Furthermore, Social Security payments are scheduled based on the beneficiary’s birthdate, usually landing on a Wednesday.
However, another significant date to note this year is November 20th, which could be crucial for beneficiaries as we approach the year’s end.
Big Changes Coming to Social Security: What to Expect in 2025
After much anticipation, the Social Security Administration (SSA) has officially confirmed the new COLA increase for 2025. This yearly adjustment is crucial as it helps retirees maintain their purchasing power amid inflation.
While recent years have seen significant COLA increases due to higher inflation rates, the trend has shifted. As inflation levels have stabilized, next year’s COLA will be set at 2.5%, marking the smallest increase in four years.
To put it into perspective, as of September, the average Social Security benefit for retirees was approximately $1,921 per month, which translates to $23,052 annually. With the 2.5% adjustment, the average monthly benefit will increase to $1,969, or around $23,628 per year.
Budgeting for 2025: A Smart Move for Social Security Beneficiaries
The amount of Social Security benefits individuals receive can vary greatly based on factors such as their work history, earnings, and the age at which they started collecting benefits. For many retirees, Social Security forms a significant part of their income.
According to the SSA, as of mid-year, around 90% of Americans over 65 receive Social Security benefits, which make up roughly 30% of their income.
However, for some, Social Security is an even more critical source of funds. About 12% of men and 15% of women rely on Social Security for over 90% of their total income, while nearly 42% of women and 37% of men depend on these benefits for at least half of their income.
As the new year approaches, retirees are encouraged to develop a budget to account for the updated benefits starting in January 2025. By doing so, beneficiaries can plan their finances more effectively.
Utilize Your My Social Security Account Before the November 20 Deadline
Retirees who haven’t done so already should consider setting up their My Social Security account by November 20. This free online tool allows beneficiaries to monitor their current benefits, project future payments, check the status of their claims, and download essential tax documents like 1099 forms.
By early December, beneficiaries can access their accounts to view the official notice of their new COLA-adjusted benefits. Importantly, having an account set up before the November 20 deadline ensures that retirees receive updates promptly and can take advantage of all available resources.
Physical COLA Notices Will Be Sent in December
While the online portal is a convenient way to stay updated, the SSA will also send out physical COLA notices by mail throughout December for those who prefer not to use digital platforms.
However, having quick access to your updated benefits through your online account can simplify financial planning.
To assist retirees in managing their finances effectively, it’s advisable to develop a practical budget. Consider these tips:
Budgeting Tips | Description |
---|---|
Calculate After-Tax Income | Determine your net income to know how much you have available to spend. |
Estimate Core Expenses | Be conservative when planning for housing, transportation, and groceries. |
Save for Emergencies | Set aside a portion of your income for unexpected expenses. |
Track Spending | Regularly monitor your spending to identify areas for improvement. |
FAQs
Why is November 20 a crucial date for Social Security beneficiaries?
Beneficiaries need to set up their My Social Security accounts by this date to receive timely updates on the COLA increase and access other essential information.
How much is the 2025 COLA increase?
The 2025 COLA increase has been set at 2.5%, which is the lowest adjustment in the past four years.
Will I receive a physical notification about the COLA increase?
Yes, the SSA will mail physical notices throughout December. However, having an online account allows you to access this information earlier.