COLA for the year 2025
In 2025, the payments of the social security are projected to rise by about 2.57%. This is less than the 8.7% rise expected for 2023 and 3.2% for 2024. The exact amount will be determined by factors such as inflation rates and so on.
Effect of COLA in the Various States
Social Security payments are not fixed and the amount paid differs with the state; those in the richer states receive higher benefits. The 2025 COLA will cause the raise to be even less as some of the states have lower average payments.
States with Lowest Social Security Payments:
• Mississippi: $1,673
• Louisiana: $1,674
• New Mexico: $1,696
• District of Columbia: $1,696
• Arkansas: $1,717
• Alaska: $1,733
• Maine: $1,741
• Kentucky: $1,748
• Montana: $1,751
• California: $1,767
In Mississippi, where the average benefit is $1,673, the increase might be around $41.80 a month. For instance, in New Jersey whose average benefit is $2,100, the increase could be about $52.50 per month.
What May Influence Your Benefit
Some of the factors which may affect your Social Security payment include your age of retirement and the amount of earnings you made in your lifetime. Residents of states with lower median income get smaller cost-of-living adjustments because the increase is made as a percentage of the total benefit.
Tax Impact and Cost of Living
Some states, for instance New Mexico and Montana, tax Social Security benefits, thus decreasing the amount of net income which retirees receive. The lower COLA will not be adequate to offset the cost of living increases, which may pose a challenge to the retirees to handle their expenses.
Final Announcement
The new COLA for 2025 will be announced on the 10th of October once more inflation information is out. The current projection of a 2.57 percent rise will be the slowest since the pandemic in 2021.
Kevin Thompson, the CEO of 9i Capital Group, pointed out that Social Security was never designed to sustain retirees but it remains an important stream of income for many people. This COLA may not be enough to cater for the rising cost of living for the retirees, especially in states that have high costs of living and high taxes.
