The Social Security Administration (SSA) will implement the cost of living adjustment (COLA) for 2025 sooner than most beneficiaries anticipate. Supplemental Security Income (SSI) beneficiaries will receive their changes first, still in 2024.
But first, let us step back and explain how this anomaly will occur and how it will affect these and other beneficiaries.
The Social Security COLA
Every year, the SSA adds a COLA to its benefits to guarantee that its recipients can keep up with inflation year after year. This is due to the fact that once the benefit base or “primary insurance amount (PIA)” is established, beneficiaries are not eligible to any benefit increases. Because the COLA increases practically every year, this would quickly deplete their economic resources, which is why the SSA makes the adjustment.
The COLA for Social Security benefits is computed using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the year (July, August, and September) and compared to the same data from the previous year. The resulting figure will be used as the new COLA.
The new rise is revealed in October, and this year was no exception, with the 10th bringing the announcement of a 2.5% increase in their payments beginning in 2025. But, if that’s the case, why would SSI benefits be increased in advance?
Supplemental Security Income (SSI) payments
SSI pays monthly benefits to those with disabilities and the elderly who have little or no income or resources. The rules for receiving these funds are fairly severe, as one must be a child or an adult with
- Little to no revenue, and
- Few or no resources, and
- Disability, blindness, or being 65 years or older.
Because this payment is intended to help people in greatest need, the limits are fairly rigorous and enforced. For example, SSI is normally available to people who make less than $1,971, and additional sources of income are considered, reducing payments.
Resources such as vehicles and money in bank accounts should not exceed $2,000 for people and $3,000 for couples, though if you are a parent requesting for a kid, these figures increase by $2,000.
The quantity of money one can receive is also closely limited. The maximum monthly SSI benefit for 2024 is $943 for an individual and $1,415 for a couple; however, for every $2 you earn from work, your SSI payment can be lowered by about $1, and for every $1 you make from non-work sources, your SSI payment can be reduced by about $1.
If the program is so stringent, how come the increase will be implemented sooner?
Typically, SSI payments are made on the first of each month. The issue with this scheduling is that the beginning of each month can easily fall on a weekend or a national holiday, disrupting the SSA’s calendar because the agency does not disburse benefits on days when banks are closed and the US Postal Service does not deliver mail.
This means that payments are advanced to ensure that recipients do not face delays in getting their payments due to holidays or weekends, and that they can always pay their expenses on time.
This is what will happen with the first payment in 2025. The payment would naturally fall on the first of the month, which coincides with New Year’s Day. Due to the New Year’s Day holiday, the SSA has chosen to forward the payment date to December 31, 2024, with claimants receiving their usual amount plus the anticipated COLA rise for 2025.
ALSO SEE : Increasing Retirement Age Beginning January 1, 2025 – Impacting Those Born in 1958 and 1959