Good news! This week, the first round of 2025 Social Security retirement payments will be sent out.
For millions of older Americans, these benefits are a big part of their retirement income. This year, payments started being higher in January because of the Cost of Living Adjustment (COLA).
This is done every year to help recipients keep their purchasing power. The increase affects all benefits that the SSA is in charge of, such as disability and retirement payments.
What’s the Deal?
With so many folks depending on Social Security, it’s no surprise that payments don’t all land in bank accounts at once. The timing of your payday depends on a few key factors, like what type of benefit you receive and when your birthday rolls around.
This week, if your birthday happens to fall between the 1st and the 10th of any month, your Social Security payment will make its grand entrance on Wednesday, January 8.
Thanks to the COLA adjustment, the average retirement benefit is set to rise by roughly $49 per month, increasing from $1,927 to $1,976, according to the SSA.
For retirees who hit the Full Retirement Age of 67, the maximum monthly benefit is $4,018. Opting to start your benefits early at age 62 caps your maximum payment at $2,831, while holding off until age 70 could boost it to as much as $5,108 per month.
That said, most retirees don’t qualify for the maximum payout, as it’s tied to the total income you earned throughout your career.
What’s Being Said
An independent policy analyst who focuses on Social Security and Medicare, Mary Johnson, said, “The 2025 COLA is going to be the smallest adjustment Social Security recipients have seen since 2021, even though prices for things like housing, meat, car insurance, and many services and repairs remain high.” A 2.5% increase is close to the historical average, even though it is the lowest COLA since 2021.
AARP CEO Jo Ann Jenkins recently said, “This change gives older Americans much-needed relief, helping them better handle the costs of necessities like gas and groceries.”
People who are retired and depend on Social Security for a lot of their income were hit hard by inflation last year. But even with this rise, many older Americans may still find it hard to pay their bills. For 40% of older adults, Social Security is still their main source of income.
The next set of retirement payments will be made on January 15, and the next set will be made on January 22. The SSA says you should wait three business days before calling them if your payment does not show up when you expect it to.
What about the Fairness Act?
President Joe Biden has officially signed the Social Security Fairness Act into law, paving the way for nearly 3 million Americans to receive backdated benefits starting from January 2024. These payments will amount to more than $4,000 per person.
This new law ensures backdated benefits for millions who were previously excluded from receiving full Social Security payments due to the nature of their jobs. It primarily impacts public service workers, including teachers, firefighters, police officers, and government employees.
Efforts to improve Social Security benefits for this group have been in the works for years, with the Senate first discussing the issue back in 2003.
The Social Security Fairness Act not only boosts future benefits but also requires the Social Security Administration (SSA) to issue back payments dating back to January 2024. So if you are found to be eligible for Social Security payments, they will be sent for the whole 2024 year, even if we are already in 2025.
According to the Congressional Budget Office (CBO), eliminating the Windfall Elimination Provision (WEP) will raise monthly payments by an average of $360—a figure President Biden highlighted when signing the bill on Sunday.
“With this bill, we’re expanding Social Security benefits to millions of teachers, nurses, public employees, their spouses, and survivors,” Biden stated. “This means an estimated average increase of $360 per month.”
