Social Security Increase 2025: impact and financial deficit

Millions of Social Security beneficiaries will receive a 2.5% increase in their monthly checks starting in January 2025.

The Social Security Administration announced that this adjustment is in response to the cost of living increase (COLA).

This increase means an average of more than $50 extra per month for retirees.

Around 72.5 million people, including retirees, disabled individuals, and minors, will benefit from this adjustment.

Social Security Increase in 2025 Eases Expenses but Doesn’t Satisfy All Retirees

Commissioner Martin O’Malley emphasized that this increase will help many manage their expenses, despite the drop in inflation.

However, some retirees feel the increase will not be enough to cover the rising cost of living.

Sherri Myers, an 82-year-old retiree, expressed concern about not being able to meet her basic needs.

Myers is considering seeking a job at Walmart to supplement her income.

The retiree shared that even grocery store prices have become unaffordable for her.

In 2024, beneficiaries already received a 3.2% increase, following a historic 8.7% rise in 2023 due to high inflation.

The lower increase in 2025 reflects the slowing inflation.

The agency will notify beneficiaries of their new amounts by mail starting in December.

Adjustments for those receiving Supplemental Security Income will begin on December 31.

The program is funded by payroll taxes, with the maximum threshold rising to $176,100 in 2025.

Despite the adjustments, Social Security faces a significant financial deficit.

A report from May indicated that the program’s trust fund will not be able to pay full benefits starting in 2035.

If the fund is depleted, the government will only be able to pay 83% of benefits, according to the report.

AARP Director Jo Ann Jenkins insists that measures must be taken to secure the future of Social Security.

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AARP has called on Congress for bipartisan action to strengthen the program in the long term.

Presidential candidates Kamala Harris and Donald Trump have very different proposals to secure the fund.

Harris proposes raising taxes on billionaires and large corporations to cover the deficit.

Trump, on the other hand, claims that economic growth will solve the issue, rejecting changes to the retirement age.

Both candidates were interviewed by AARP to present their plans for the future of Social Security.