Social Security's COLA will be 2.5% in 2025, down from 3.2% in 2024

[BumRushDaShow]

Source: MarketWatch

Published: Oct. 10, 2024 at 8:32 a.m. ET


Social Security’s cost-of-living adjustment will be 2.5% in 2025, down from the 3.2% seen in 2024, the Social Security Administration said on Thursday. The average COLA over the last 20 years has been 2.6%, according to the Senior Citizens League, a nonpartisan advocacy group.

The consumer-price index for urban wage earners and clerical workers, known as CPI-W, is the index used to determine the annual COLA. That index more heavily weights costs for urban non-retirees, such as those for transportation, food, clothing and other expenses.

COLA is not a raise but an adjustment that helps the roughly 67 million Social Security beneficiaries keep up with inflationary pressures. Among Americans 65 and older, 40% rely on Social Security for half or more of their income, and about 14% depend on it for 90% or more of their income, according to AARP.

“Social Security, for most people, is the one place that is inflation-adjusted. It’s critical for keeping people afloat,” Bill Sweeney, senior vice president of government affairs at AARP, said before the announcement. “COLA may not feel like very much in the face of pricing volatility. People are struggling.”

Read more: https://www.marketwatch.com/story/social-securitys-cola-will-be-2-5-in-2025-down-from-3-2-in-2024-fde77b01

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Link to SSA PRESS RELEASE - Social Security Announces 2.5 Percent Benefit Increase for 2025

[Walleye]

1. I would like to thank the Democrats for keeping me afloat with Social Security.

Because I know Republicans would do their best to cheat me. And eliminate the program altogether if they could.

[Johnny2X2X]

2. Reasonable considering 2.5% is higher than inflation right now.

Social Security needs to be raised, and make it all non taxable. But the last few years, recipients have seen robust increases that have kept up with overall inflation. The one big problem is that health care costs for the elederly rise too quickly.

[LittleGirl]

3. Non-taxable indeed

I am going to get my first check in November and I have to have taxes deducted. When I got my first paycheck in 1976, I paid taxes before the government started to exclude it later in my career.

Why are we having to pay taxes on our SS again? I was so hopeful when Obama said that anyone making less than 50k a year would not have to pay anymore taxes. When is that going to happen?

I cannot live on my SS any place in this country. My spouse is younger than me so he'll be working for at least another decade.

[Johnny2X2X]

4. Like everything good for regular people

The Demcractic Party is fighting tooth and nail to make all Social Security payments non taxable, increase payments, and strengthen the program overall. And as you can probably guess, the Republicans are fighting tooth and nail to styop them, to make Social Security payments smaller, to raise the age for it, and to tax it even more.

[LittleGirl]

12. Right?

The GOP do not care about us. They only cater to their donors and corporations. I hope we are able to purge the GOP.

[Jimbo S]

5. A mean's test, I believe(?)

If a couple is making $32K earned income, then with SSI on top of that. Would this fall under progressive taxation?

[LittleGirl]

13. Actually everyone pays income taxes on their SS. nt

[Jimbo S]

27. Not how I understand it

Only pay on SSI if half of SSI + other earned income exceeds $32,000, if married filing jointly.

[Happy Hoosier]

31. Depends upon income.

Very low income people (less than $32,000) pay no taxes on social security, but then again, thay are livign just above the poverty line at that income. Then there's a band where 50% of the benefi is taxed, and over like $44,000 (a rather low amount), it's 80%.

[BumRushDaShow]

7. Because I am a retired fed under CSRS-Offset

I get both a federal annuity and SS (the latter that started this year). Once my checks came correctly, first thing I had to go do was submit a W-4V to have federal taxes taken out. Thankfully, retirement benefits aren't taxed here in PA for state taxes but wish that applied to SS federally. It was bad enough that I was already taxed federally for the annuity and still have to pay federal income tax (although slightly reduced by spreading out the already-paid amount as deductible over time until the contribution has been matched, which can take years based on the formula they use).

[onandup]

28. Ah, your spouse working is the fly in the ointment

When social security is the bulk or all of your income you probably won't pay any federal taxes on it.

[Jacson6]

15. My rent has gone up $250 since 2021.

SSA COLA is only a little bit of help.

[ArkansasDemocrat1]

18. Mine went up less than my rent increase last year

[LiberalArkie]

6. So, medicare part B is going from 174.70 to 185.00 which is about 5% but the SS is only 2.5%

So in 2025 , my SS check will be less. Right?

I wish they would calculate in the medicare price increase as all of us have to pay that in anyway.

[slightlv]

8. This is why i dont get hyped about the colas.

Medicare always eats up the Cola and then some from what's left. There's no way to keep up, let alone get ahead... and I'm trying g like he'll!

Still. I'm one of the 14% who depend on it for 90% of my monthly income and I'm very grateful to have it. But I've paying into it since I was 14, so I don't consider it the govt's money. I helped pay for my mom's SS, and now I'm getting some of those huge tax bites out of my old paychecks back again. Still, it should be nontaxable, as it was before Reagan. I've always felt like it was double taxation for income tax purposes. YMMV, of course.

[ArkansasDemocrat1]

19. No, you'll get something more

I chose $1,000 a month Social Security for my example

$1000 SSA
- $175 medicare
= $825 monthly deposited in 2024

$1000 SSA
+ $25 2025 COLA of 2.5%
= $1025
- $185 Medicare
= $840 a month in 2025

You'd have to be getting just $400 a month in SSA to be able to not match the Medicare increase.

[slightlv]

9. So COLA is gonna to go to 2.5%

The next story under that is inflation at 2.4% and the process by which our cola is decided is based on urban wage earners and office clerks... people whose lives and cash out flow doesn't resemble mine at all. No wonder we need help!


Edits due to using my phone and autospell!

[Bayard]

10. Eliminate taxes on SS

Its ridiculous that we pay that. Wasn't that a Reagan thing?


And raise the ceiling for gawdsakes! That should take care of us not paying taxes on it, and probably keep it going for many years to come.

[onetexan]

16. This!!

[DFW]

21. I agree on both counts, even though it wouldn't affect me

The Germans will still take 50% of my SS benefits whether the US would or not.

And I agree that the cap should be raised, although I doubt it would compensate for the benefits not being taxed. The higher the cap goes, the less people will be paying the higher tax (there are a lot less people earning $750,000 than there are earning $200,000).

I did the math on my approximate change (3.2% vs. 2.5%), and the COLA lowering will affect me to the tune of $15.92 a month after German taxes, minus any increase in the taxes paid in Stateside (I still work full time).

The whole question deserves more intensive questions and comments from those most affected by any changes, and, under my current circumstances, I am certainly not one of them.

[Bayard]

23. German taxes are 50% of your SS?

[DFW]

26. Yup.

Officially, it’s a base of 42%, but there is a 5% “solidarity supplement” that was added on in 1991 when East Germany unified with the West. That was supposed to last ten or twenty years, to get the East back on its feet. But a 5% tax surcharge is to a government like a heroin addiction. Once they have it, they can’t let it go. There are other add-ons that bring the German top rate to a de facto 50%, and that kicks in at under $100,000. Plus, the Germans choose to ignore parts of the double-taxation treaty that they find inconvenient, so most of my income is taxed, between the USA and Germany, at 73%. Luckily, Social Security payments to US citizens living in Germany HAVE been addressed by both countries, so I am not taxed by both countries on them, just my country of residence, which is Germany. So, I don’t even get the 15% exclusion that Americans in the USA get, just a straight 50% tax on all of it, for which I receive nothing in return. Nice deal, huh?

[Bayard]

33. Egads!

[DFW]

34. That's putting it mildly.

For all those high taxes, you'd think I would be entitled to a few things from the Germans, but nope. Nada. Zip City. When I moved here, I was told I could keep my US health insurance, or get local German health insurance. Since my employer is in the USA, I keep my thoroughly worthless Blue Cross just to be able to say I had something (you need it if you want to move here as a foreigner). I was directed to a German health insurer that would take me, and filled out their form, This was in 2012, so 14 years ago. They came back with a quote of €2500 (about $3000 at the time) per month! That was about $36,000 a year, and all out of my pocket. The dollar is a little better against the Euro now, so that would have been $33000 a year, although I doubt the premium would have stayed at €30,000 a year for 14 years. Best case scenario would have been that I paid the German health insurance company $460,000 over the last 14 years, and though I have had operations (heart, knee, serious dental work) and need daily heart medication, all that has not amounted to over $75,000 over the last 14 years. As a German citizen over 65, my wife is now fully covered by the German version of Medicare, which is fully comprehensive except for lymphatic drainage, which we have to pay for. She lost 84 lymph nodes on her left side after her huge cancer operation in 2016, so she needs lymphatic drainage every week, which I pay for out of pocket. I was paying for her health insurance at the time (she was 64), luckily. One advantage--medical costs not covered by insurance are deductible from gross income here, although at their tax rates, they ought to be! Just keep in mind, when you see Fantasyland posts from the "everything is free in Europe," crowd, don't believe it. They finance things differently from the way we do, and hospital stay costs are, in general, lower, but nothing is "free." It all gets paid for, just not the same way.

[onenote]

25. The legislation subjecting social security payments to taxation passed with a large bipartisan majority

In the House, the legislation passed 243-102 with 163 Democrats and 80 Republicans voting aye, 54 Democrats and 48 Republicans voting no, and 51 Democrats and 38 Republicans not voting.

In the Senate, the vote was 58 -14 with 26 Democrats and 32 Republicans voting aye, 6 Democrats and 8 Republican voting no, and 14 Democrats and 14 Republicans not voting.

[DENVERPOPS]

11. I gotta tell you,

dating back to when HWBush's CABAL under front man Reagan, screwed with the Consumer Price Index.....(& COLA) The entire calculation is made to underestimate the true cost of living increases............HW and cronies just screwed with their "basket" of things that calculated what they wanted to be and then lowered Cost of Living, since so many many different things were calculated using the COLA.
Wage increases, military pay, etc etc etc.

Several of my European friends, when talking about retirement and retirement programs, shared what THEIR Seniors in Europe receive vs those in the U.S. and what our Social Security. provides.............It was shocking to see the differences.

I laugh at people I talk to who are approaching retirement, and are happy that they will get Medicare, and can "relax" about medical bills.
LOL LOL LOL................. I tell them to look again........The cost deducted from your SS check amount for basic, the cost of supplemental insurance to help, but not pay for the rest, the cost of Medicare Drugs insurance, the lack of Hearing coverage, Dental Coverage, Eye Coverage. ETC ETC......And now, with this Medicare Advantage BS, it is even worse for you if you buy into these private companies running your medical................

[LittleGirl]

14. Yes, yes and Yes! nt

[DENVERPOPS]

17. Thank you LittleGirl

I have found that a very high proportion of our population, doesn't even begin to have any knowledge on all these most basic things.

AND, Common Sense went out the window ages ago....

And they all wonder how we got in the mess(es) we are currently in.......

The perfect title for a book about the past 45+years, if I were to write one, would be:

WHILE THE NATION SLEPT

[onandup]

30. People are being pushed into MA

They just can't afford the Medigap premiums, which can be hundreds of dollars a month. Not to mention some MA plans in addition to having no monthly premium also pay some or all of the monthly standard Medicare deduction for you. MA often includes a prescription drug plan and some help with dental and vision.

Basically folks have to go into managed care because they cannot afford original Medicare. Given trends, I can see it happening to my wife and me someday.

[Bengus81]

20. Yep on Medicure...I thought it would be free in the years before I received it.

Got straightened out by my brother who is three years older about how Medicare is NOT free. In fact it costs me a hell of a lot more than the ACA that I of course had to give up the day I turned 65.

[DFW]

22. Except for the medical coverage, don't be too quick to envy the Europeans, unless they are ex-members of the government

My wife is a retired social worker, and she got an increase in her monthly payments as a handicapped twice-survivor of cancer. So her payments (taxable) went up all the way to maybe €1450 ($1600) a month. Whoopie. At $1600 a month minus German taxes, you may or may not be able to pay rent and eat here in Germany. Curiously, she does get a bonus most Germans do not have. Being married to a US citizen who paid in the max almost all his working life (working from 1975, max SS tax from 1979-present) and is now collecting social security, she is entitled to a (also taxable at 50%) ±$950 per month from US Social Security as well. We hadn't the slightest idea about this. The FBU at the American embassy in Warsaw, Poland (!) told us about it, and sent us the paperwork. The US Consulate in Frankfurt confirmed it, approved the paperwork, and sure enough, she started getting the payments a little over a year ago. It's not a fortune, but when your own government gives you a retirement payment of $1600 a month minus taxes, it counts.

Ex-Ministers and members of Parliament get big benefits, of course, and if you are/were part of the European Commission in Brussels, I was told you get something like €10,000 a month tax-free for life. That is approaching the "must be nice" category.

[LittleGirl]

29. I did not know that. Thanks for sharing.

it may come in handy in a few years when hubby retires.

[DFW]

32. It's hard to know things that aren't common knowledge

With Social Security, we all get directed to this website or that these days. If the thing about foreign spouses being eligible for minor payments is in the instructions somewhere, we sure missed it, and all my phone calls to Social Security offices in the USA never revealed that. I don't even know if it applies to American spouses. It would seem logical to me that it does, but when has government bureaucracy ever been logical? How come it took a casual remark by a Polish employee of the US embassy in Warsaw to tell us this?

Anyway, if the knowledge should prove useful to you, either now or down the line, I'm glad to have passed it on. I don't begrudge the US government for taking out what taxes they have over the years, but I do call them out on the fact that they have not updated the Double Taxation Treaty with Germany (in my case, but it applies to all countries) to reflect changes in the law that have been enacted since, and I strongly object to the fact that the USA is one of two countries left on earth that does not recognize residence-based taxation. American Abroad are nine million strong. Even if one discounts child dependents, that means about six million people filing two tax returns a year that shouldn't have to. Some of our politicians get some mileage out of the fact that there might be a couple of billionaires living on huge expensive yachts moored off of Monte Carlo or Grand Cayman, but that's probably less than ten people, and the rest of us peons are NINE MILLION strong. Our politicians are quick to come asking for money during campaign season, but when the election is over, we return to our "minor annoyance" status. It gets old.

[LittleGirl]

36. I left CH In April

So hubby and I are living on separate continents right now. He flies in next week.
He hasn’t worked 40 quarters in the US yet so his retirement is going to be funded by the UK, DE, CH and the US. I only worked here in the states. I agree completely by the taxation issues we peons have to go through yearly and nobody here gets that. I’d love to be reimbursed for all the tax software we have to purchase just to do our very complicated paperwork of filing our income. It’s a full time job to make sure we’re compliant in his CH employment and my US residency. We hope to get settled here together in 2025. Fingers crossed.

[Intractable]

24. Diet COLA

[Elessar Zappa]

35. Honestly,

I think everyone should be given a flat $300 raise this year due to make up for the three years of inflation. For someone who doesn’t clear a lot on their social security check, 2.5% doesn’t cut it.