All Individuals Retiring under Social Security Should Complete This Task by November 20th.
All Individuals Retiring under Social Security Should Complete This Task by November 20th.
The Social Security program's intricacies can be overwhelming, and it's essential for retirees to keep track of specific dates. For instance, retirees are aware that their monthly benefits are disbursed on a Wednesday, depending on their birth date, and the annual cost-of-living-adjustment (COLA) typically falls between early to mid-October.
As we approach year's end, November 20 should be added to retirees' calendar reminders. Here's the reason behind it.
Your 2025 COLA Detailed
In October, the Social Security Administration (SSA) revealed the COLA for 2025. Every year, benefits are adjusted to help retain purchasing power against inflation. Inflation has skyrocketed lately, resulting in appreciable benefit enhancements for retirees. Fortunately, the rate of inflation slowed this year, which is detrimental for COLA but does help curb the uptick in consumer prices, ultimately making living expenses more manageable.
The SSA confirmed that the COLA for 2025 will be 2.5%, the least considerable COLA in four years. At the time of writing, the average monthly Social Security pension for retirees in September was approximately $1,921, summing up to around $23,052 annually. With a 2.5% increase, the average monthly benefits will swell up to $1,969, rendering a yearly payout of about $23,628.
The enhanced benefits will take effect from January 2025, but the exact amount can vary for each retiree based on the commencement date of their retirement benefits, their work years, and their career earnings. Social Security can contribute significantly to a retiree's income.
As of June 30 this year, approximately 9 out of 10 individuals over 65 were beneficiaries of Social Security benefits, according to SSA statistics. For individuals over 65, Social Security benefits accounted for roughly 30% of their income. However, it's worth noting that 37% of male recipients and 42% of female recipients solely depend on Social Security benefits for at least half of their income, while 12% of male and 15% of female recipients completely rely on Social Security benefits for at least 90% of their income.
Knowing the amount retirees can expect from Social Security helps them plan their expenditures. This is why all retirees should create their personal my Social Security account by November 20. The service is complimentary and provides retirees with multiple facilities such as requesting a replacement Social Security card, accessing a 1099 tax form, tracking the status of applications, estimating future benefits, and managing current benefits.
Through this account, retirees can also view their COLA notice, learn about their benefits increase for the following year, and even track the enhancement in early December. However, to avail of this notification, retirees must create the account by November 20.
A Traditional Letter Remains Valid
Some individuals prefer to steer clear of the internet, so a physical COLA notice will be mailed out throughout December.
Budgeting can aid in better financial decision-making, and mastering budgeting requires knowing your income sources. Therefore, if you have a spare moment, it may be worth creating a my Social Security account by November 20 to gain insights into your future benefits as soon as possible.
If you are planning to establish a budget, here are a few strategies that might assist you:
- Determine your after-tax income to know how much money is available for spending.
- Be cautious while estimating upcoming expenses for housing, transportation, and food. Events rarely unfold as planned.
- Attempt saving a little every month for unfortunate events and unforeseen expenses.
- Evaluate your progress and analyze areas where expenses exceeded expectations to improve your forecasting for future budgeting.
After learning about the 2.5% COLA for 2025, retirees should ensure to create their my Social Security account by November 20 to access the notification about their increased benefits. Properly managing finances is crucial for retirees, and understanding the exact amount of Social Security benefits can significantly aid in budgeting and planning for expenditures.