Social Security beneficiaries could face an unattractive scenario in terms of expectations for increases in their benefits. As you already know, every year, the Social Security Administration (SSA) applies the cost-of-living adjustment (COLA), an increase that follows the inflation of the last year and whose purpose is to prevent beneficiaries from losing purchasing power against the upsurge in prices.
We are entering the last of the three months that the SSA considers in calculating the COLA adjustment (July, August, and September). The CPI-W consumer price index for this quarter is compared with the same quarter of the previous year and, if it is noted that there was some percentage increase in products and services, then this percentage translates into an increase in profits. .
When Is the COLA Increase Announced and Applied?
Once the SSA has found the correct increase number to apply, it is announced after the second week of October, but beneficiaries will notice an increase effective only on January 1, 2025.
Although we still do not know exactly how much the amount of COLA 2025 that will be applied will be, but predictions can be made. In fact, The Senior Citizens League (TSCL), a non-partisan, nonprofit organization dedicated to defending the interests of seniors, has the practice of preparing COLA adjustment forecasts throughout the months, and the number varies depending on the most recent data they read.
Shannon Benton, executive director of TSCL, argues that the COLA should be at least 3%, to “ensure that seniors have enough to feed themselves” and to pay for decent housing, the two basic reasons why TSCL advocates for and ask for a COLA that is around 3%. Benton also mentioned that about 2 in 3 older Americans depend on Social Security for more than half of their monthly income, while almost 30% depend entirely on these payments to pay all their expenses.
Determining the Official Social Security Increase — The COLA We Can Expect
Although the latest projection points to a 2.5% increase, the official adjustment will not be announced until October 2024. This announcement will be based on the final inflation figures provided by the SSA. If the projection holds, the average beneficiary could receive a monthly check of $1,968 in 2025. In turn, most beneficiaries would receive their corresponding payments in January 2025.
Inflation plays a crucial role in determining Social Security benefit adjustments. In the last 12 months, prices increased by 2.5%, which has influenced the projection of increases for 2025. This price increase directly affects the purchasing power of beneficiaries, especially for those who depend heavily on this income.
September SSDI Payments, Amounts, and eligibility
In September 2024, two more payments remain for SSDI beneficiaries, who can receive a maximum of $3,822 per month, although we must note that not all individuals qualify for this total. There are two types of disability benefits: Supplemental Security Income (SSI) and SSDI. While SSI is funded by the federal government, SSDI is supported by taxes that employees pay into Social Security.
Those who began receiving Social Security benefits before May 1997, or who are also SSI recipients, are not eligible for the SSDI payments made in September. According to the Social Security Administration, September payments were split over multiple dates, with beneficiaries born between the 11th and 20th of each month receiving their payments on September 18, and those born between the 21st and 31st receiving their payments on September 25th.
The maximum of $3,822 is available to those beneficiaries who meet certain requirements: they must reach full retirement age and have contributed taxes to Social Security for at least 35 years. In some cases, some workers may need more than 35 years of contributions to qualify for the maximum benefit, if they had lower wages.