Seniors receiving Social Security benefits can expect a moderate increase in 2025, but it might not be enough to keep pace with rising living costs. Early estimates from the Congressional Budget Office (CBO) project a 2.5% COLA (Cost-of-Living Adjustment), while the Senior Citizens League (TSCL) forecasts a slightly lower figure of 1.75%.
This comes after a significant increase of 3.4% in 2024, translating to an extra $59 per month for beneficiaries. However, this followed even higher adjustments in 2023 (8.7%) and 2022 (5.9%), driven by record-breaking inflation that the Social Security Administration managed very well at that moment.
Social Security Payments to Lose Purchase Power Against Inflation
It’s important to note that these are just estimates. The final COLA for 2025 will be based on the average inflation rate during the third quarter of 2024 compared to the same period in 2023. With eight months of data still to come, the final figure could differ from the current projections.
While a COLA increase is expected, concerns linger about its adequacy in the face of rising prices. TSCL’s 2024 Senior Survey revealed that many beneficiaries found even the more substantial 2024 COLA insufficient. Nearly 60% of respondents reported financial struggles, and 62% felt the increase wouldn’t adequately cover their expenses and maintain their standard of living.
This sentiment is echoed by the Atticus survey, which found that 40% of seniors planned to seek employment due to the perceived inadequacy of the COLA. Additionally, nearly half of single seniors (47%) considered returning to work to supplement their income.
Retirees Encouraged to Seek Additional Incomes
The findings from these surveys highlight the growing financial strain faced by many seniors relying on Social Security. The gap between benefit levels and the rising cost of living is widening, causing significant stress and forcing some individuals back into the workforce despite their age.
These statistics and personal accounts underscore the urgent need for more comprehensive solutions to support elderly individuals, particularly those who are single or struggling financially. While the projected COLA increase for 2025 offers some relief, it may not be enough to address the long-term challenges faced by this vulnerable population.
Remember that the data provided in this article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial professional for personalized guidance.
Do I Have to Pay Taxes On My Social Security Checks?
Tax obligations on Social Security benefits are set to impact a growing number of recipients in the upcoming tax season, as reported by TSCL. A significant 23% of survey respondents, receiving Social Security for three or more years, noted that they incurred taxes for the first time during the 2023 tax season. This percentage is expected to rise further in the current tax season due to the 8.7% COLA increment implemented in 2023.
The taxation of Social Security benefits kicks in when income exceeds $25,000, a threshold that has remained unchanged for inflation since its introduction in 1984. Once income surpasses specific thresholds, up to 85% of Social Security benefits become subject to taxation.
Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League, anticipates that the increased Social Security income will not only lead to more recipients paying taxes this tax season but will also result in taxes claiming a larger share of Social Security checks in 2024.