October 10, 2024
The all-important cola update is here.
No. Not that type of COLA – also this is not sponsored.
I’m talking about the cost of living adjustment – COLA. This is the announcement that 72.5 million social security and SSI beneficiaries have been waiting for. This tells them how much their monthly payments will be adjusted based on inflation.
The Social Security Administration announced today – the cola increase for those beneficiaries in 2025 will be 2.5%. That breaks down – according to the administration to about another $50 a month.
Now keep in mind – this adjustment comes after the 2024 COLA increase of 3.2% and the historically large adjustment in 2023 of 8.7%. Lots of recipients say a 2.5% increase isn’t enough to keep up with the high cost of living. But – like everything I’ve been talking about for the last week – this is not determined by the president. The formula that determines the cola is determined in the Social Security Act of 1935 which ties the cola calculation to the consumer price index – which I just told you about in the video right before this one.
This new 2.5% COLA increase will take effect in January of 2025. And if you are a beneficiary of social security or SSI you will get an official notification from the social security administration by mail in December. If you have a my social security account online, you can also look at your personalized cola notice in your account.
Obviously – the funding for social security comes from payroll taxes. You know – if you look at your paycheck you’ll see social security taxes automatically taken out of it. But what you may not know is you’re only taxed for social security up to a certain amount of your check. And if you make more than the limit, then you aren’t taxed for social security on that additional amount. Well that limit increases every year. So in 2025 more of your paycheck is going to be subject to social security tax. In 2025 the first $176,100 will be subject to social security tax. Whatever you make over that amount will not be subject to social security tax. In 2024, your wages up to $168,600 were subject to social security tax and in 2023 your wages up to $160,200 was subject to social security tax.
Read the COLA update here.
