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).
Beneficiaries will see an extra $50 monthly starting in January, according to a recent SSA statement. Increased payments to approximately 7.5 million SSI recipients will begin on Dec. 31, 2024. Over the last decade, the cost of living adjustment (COLA) has increased by about 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).
“Inflation took a financial toll this past year, particularly on retirees, who often rely on Social Security as a key source of income,” AARP Chief Executive Officer Jo Ann Jenkins said in a statement. “Even with this adjustment, we know many older Americans who rely on Social Security may find it hard to pay their bills. Social Security is the primary source of income for 40% of older Americans.”
However, Jenkins said that more needs to be done to strengthen Social Security and secure a long-term solution that Americans can rely on.
If high-interest debt is affecting your retirement savings, consider paying it off with a personal loan at a lower interest rate. Visit Credible to speak with an expert and get your questions answered.
AVERAGE CREDIT CARD DEBT IN THE U.S. IN 2024
Group calls for Senior CPI
Many Americans are deeply concerned about the impact of inflation on their retirement savings and their ability to make ends meet with Social Security retirement income. Social Security recipients have lost about 20% of their buying power since 2010, according to annual research by The Senior Citizens League (TSCL).
TSCL and seniors want Congress to start calculating COLA based on the Consumer Price Index for Americans 62 and older (CPI-E) instead of the CPI-W. CPI-E is generally higher than the CPI-W because it surveys the costs of retired households over 62 and more accurately accounts for how older Americans spend money. Older and disabled Social Security recipients spend a significant share of their incomes on housing and medical costs — two spending categories that tend to rise more quickly than overall inflation. The TSCL has also called on Congress to institute a minimum COLA of 3%.
“This year represents another lost opportunity to grant seniors the financial relief they deserve by changing the COLA calculation from the CPI-W to the CPI-E, which would better reflect seniors’ changing expenses,” TSCL Executive Director Shannon Benton said in a statement. “Seniors—and TSCL—demand that Congress takes immediate action to strengthen COLAs to ensure Americans can retire with dignity. Our research shows that 67% of seniors depend on Social Security for more than half their income and that 62% worry their retirement income won’t even cover essentials like groceries and medical bills.”
If you’re looking to reduce your monthly expenses, you could consider paying off 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 is right for you.
BEST PERSONAL LOANS OF OCTOBER 2024
Tax threshold increases
Another adjustment that will take effect in January is the portion of personal income subject to Social Security tax. That is expected to increase to $176,100 in 2025, up from $168,600 in 2024. This means recipients who earn over $178,100 in 2025 will have to pay the Social Security payroll tax on the amount of their income that exceeds that 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. Consequently, as Social Security income increases due to COLAs, more retirees can reach the thresholds that trigger the tax on their Social Security benefits.
If you are retired or are preparing to retire, paying down debt with a personal loan can help you reduce your interest rate and 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 FAST: 5 STRATEGIES
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Read the full article here
