Good news for retirees: The amount of your social security check is in for a boost.
Starting next year, in 2025, retirees will see a boost in their Social Security checks thanks to a notable cost-of-living adjustment (COLA) — but this adjustment is more moderate than in previous years, which is actually a good thing.
These annual adjustments help retirees maintain their purchasing power in the face of rising living costs. Given that many seniors rely on Social Security for a significant portion of their income, a higher COLA can make a meaningful difference in everyone’s financial well-being, but it can also signify high inflation and have negative tax implications for cash-strapped retirees.
Read on for more information about the adjustment and how it might translate into a more stress-free retirement.
Steal this billionaire wealth-building technique
The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.
A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.
If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds,see what Masterworks has on offer. (Hurry, they often sell out!)
Updated expectations
The Senior Citizens League has updated its COLA expectations for 2025 and anticipates a 2.57% increase following a better-than-expected inflation reading in May. While this is slightly lower than the previous estimate of 2.66%, a lower number represents a positive adjustment for retirees — here’s why.
The inflation challenge
High inflation has eroded the purchasing power of Social Security benefits. Retirees who started receiving benefits in 2000 have lost 36% of their buying power due to inflation outpacing their benefit increases.
Benefits of low inflation
Low and stable inflation is beneficial for Social Security recipients. Historical data shows that buying power improves when COLA is less than 3%. Since 2010, there has been a 13% cumulative increase in purchasing power when COLA was under 2%.
Earn $200 cash rewards bonus with this incredible card
There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.
The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.
This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 19.74%, 24.74%, or 29.74% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.
The best part? There's no annual fee.
Tax implications
Plus, higher COLAs can lead to higher taxes on Social Security benefits. As benefits increase, more retirees may find their benefits taxable, reducing their net income since there’s no inflation adjustment built into the law. Lower COLAs can help keep more benefits tax-free, easing the tax burden on retirees.
The Fed's stance
The Federal Reserve remains cautious about inflation, which could influence future COLA estimates. Although May's CPI numbers were encouraging, inflation is still above the Fed’s 2% target, keeping the outlook for COLA uncertain.
Trending Stories
Bottom line
A lower COLA for 2025 is a positive development for retirees. While you’ll still receive a higher Social Security check, it also means better overall purchasing power and potentially lower tax liabilities.
This adjustment can provide much-needed financial relief and stability for those who depend on Social Security, helping them to better cope with the rising cost of living. Retirees should view this potential increase, however slight, as a welcome boost to their financial security in the coming year.
More from FinanceBuzz:
- 7 things to do if you’re barely scraping by financially.
- Are you a homeowner? Get a protection plan on all your appliances.
- 6 genius hacks Costco shoppers should know.
- Learn how you can escape the paycheck-to-paycheck grind.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.74%, 24.74%, or 29.74% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Subscribe Today
Want extra-cash moves to come right to you?
Stop browsing endlessly. Get proven ways to earn pocket money, help cover rent, and crush your debt — sent to your inbox daily.