As we await the official announcement from the Social Security Administration in October, many are wondering how the 2025 cost-of-living adjustment (COLA) will impact their benefits. But what about spouses who receive benefits based on their partner’s earnings? Let’s dive in and find out.
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What are the COLA Projections for 2025?
The Social Security COLA is calculated based on third-quarter inflation data, which means we won’t know the exact percentage until later in the year. However, experts predict a lower increase than in 2024 and significantly less than the 8.7% hike in 2022. Current estimates suggest a 2.63% increase for 2025.
How will the COLA change benefits for spouses?
Spouses who qualify for Social Security benefits based on their partner’s earnings will also receive a COLA boost. However, since spousal benefits are generally lower than retirement benefits, the dollar amount increase will be smaller. For example, with a projected 2.63% COLA, the average retired worker receiving $1,918 per month would see an increase of about $50 per month, while those receiving spousal benefits, averaging $911 per month, can expect an increase of approximately $24 per month.
How Are COLA Adjustments Applied?
The COLA is applied to a recipient’s primary insurance amount (PIA), which represents the amount one would receive if benefits are claimed at full retirement age. This adjustment also extends to those receiving spousal, survivor, and disability benefits. Keep in mind that actual monthly benefits may differ from the PIA due to factors like early claiming or Medicare premiums.
Planning Your Budget
While the COLA provides a welcome boost, it may not be enough to cover all living expenses, especially in an inflationary environment. Beneficiaries should start planning their budgets now and consider other income sources if needed.
Conclusion
Additional government benefits, like Supplemental Security Income (SSI), are also available to qualifying individuals and couples. These benefits are adjusted annually by the COLA as well, potentially providing further financial support.
FAQs
When will the official COLA announcement be made?
In October
How much is the estimated COLA increase for 2025?
Will spouses receive the COLA increase?
Yes, but the dollar amount increase will be smaller due to lower spousal benefits.
Can I opt out of receiving the COLA?
No, the COLA is an automatic adjustment to keep pace with inflation.
Can I receive COLA increases if I’m receiving disability benefits?
Yes, disability benefits are also adjusted annually based on the COLA.
How does the COLA affect Supplemental Security Income (SSI) benefits?
SSI benefits are also adjusted annually based on the COLA.
