COLA Update 2024 – Know Amount, Eligibility & Payment Dates

The authorities of the United States have released the COLA Update 2025, which can increase the benefits distributed among citizens. Social Security benefits are paid to Americans who belong to the low-income citizens community.

An estimated 96.7% of adults aged 60 to 89 receive social security payments to manage their monthly expenses and prove their social status. Authorities provide an average $1920 monthly benefit to a retired worker in August 2024. Citizens should know about the COLA Updates, which can impact their benefits and support living conditions.

COLA Update 2024

The cost of living adjustments (COLA) is an average percentage of the increase in the upcoming year’s annual inflation rates. Every year, the Social Security Administration determines the COLA with the help of CPI-W from the third quarter of the year.

The COLA Update 2025 is essential for adults and young adults retiring in 2024. 50% of people aged 65 receive half of their total income from the program. Hardly 25% of these individuals get 90% or more of their income through Social Security benefits. Social Security is critical as a financial relief for such citizens.

COLA Update 2025 Details

Next year, the COLA Update 2025 will see a 2.5% benefit increase in all programs that will help the citizens. Social Security Benefits and Supplemental Security Income payments will be increased by 2.5% for nearly 73 million Americans. If you break down the number, everyone will hardly receive $50 more monthly.

Let us understand this by an example: if a person receives $1920 monthly as a social security check in 2024, he will get around $1968, which is 2.5% of their average $1920 starting in January 2025. If a person receives SSI benefits, you can notice this increase from December 2024.

Benefit Increase and Inflation

Many people, especially seniors and retirees, are worried that 2.5% might not seem like much as inflation increases.

For the 12 months ending in September 2024, the inflation rate was 2.4%, 0.1% lower than the previous year; 2.5% will match the inflation rate 2025.

This shows that the amount given as a benefit will be enough for citizens to make up for their increased everyday costs.

Taxable Earnings with Increase

The Department of Social Security Administration has made another adjustment to social security, especially in terms of taxable earnings. The maximum taxable earnings increased from $168,600 to $176,100 in 2025. This is higher than the current retirees, but those near retirement age must be aware of this change.

Currently, the social security tax rate is 12.4%, of which 6.2% is for employees and 6.2% for employers. With this change, employees must pay $10918.20 in 2025 compared to $10453.20 in 2024. The employer will also pay the other $10918.20 in 2025.

Self-employed individuals must continue paying 12.4% of their own, up to $21,836.40 per annum in social security tax. This tax applies only to the first $176,100 of someone’s earnings.

Changes Coming in December

If a person receives social security payment, they can expect to receive a notice of new benefit as soon as early December 2024. Unlike in previous years, the notice will be more simplified in design, like just one page, and should be free of complex, overly coveted language.

Your notice will include some details, which are as follows:

1. The exact amount of your new benefit
2. Dates of release for your new benefit amount
3. Any relevant deductions

FAQs