Understanding Social Security can be tricky due to its rules and complexities. Retirees have specific dates to remember, such as receiving their monthly benefits on a Wednesday based on their birthday and the annual cost-of-living adjustment (COLA) announcement in early to mid-October.

As the year comes to an end, it’s crucial for all Social Security retirees to note November 20 as a significant date. Here’s why.

Your COLA for 2025

In October, the Social Security Administration (SSA) revealed the COLA for 2025. Each year, benefits are raised to keep up with inflation. With inflation rates climbing recently, retirees saw substantial increases in their benefits. Fortunately, inflation has decreased this year, which is not beneficial for COLAs, but it could help make living costs more reasonable.

The SSA declared that the upcoming COLA will be 2.5%, marking the smallest increase in four years. The average Social Security payment for retirees in September was about $1,921 per month, totaling around $23,052 annually. After the 2.5% hike, average monthly benefits will rise to $1,969, equating to around $23,628 each year.

New benefit amounts will start in January 2025, although individual payments may vary based on when benefits were claimed, employment years, and total earnings over one’s career. Social Security often constitutes a large portion of a retiree’s total income.

As of June 30 this year, almost 90% of individuals over 65 are receiving Social Security benefits, which account for approximately 30% of their income. Furthermore, around 37% of men and 42% of women receiving benefits rely on Social Security for at least half of their income, while 12% of men and 15% of women depend on it for 90% or more of their total income.

It is beneficial for retirees to know their Social Security payment amounts for the upcoming year, as it aids in budget planning. Therefore, all retirees are encouraged to set up their personal my Social Security account by November 20. These accounts are free and enable retirees to obtain a replacement Social Security card, access a 1099 tax form, check application statuses, estimate future benefits, and manage current benefits.

Additionally, retirees can see their COLA notice within this account, which details the benefit increase they’ll receive starting in early December. To access this information, retirees must create accounts by November 20.

You will still receive a mailed notice

For those who prefer not to use the internet, there’s no need to create an account. The SSA will send out physical COLA notices throughout December.

Nonetheless, having a budget can lead to improved financial decisions, and knowing your potential spending amount is essential. Spending a few extra minutes to establish a my Social Security account by November 20 might be worthwhile to view your future benefits as soon as possible.

If you’re considering budgeting, here are a few useful tips:

• Determine your after-tax income to understand your available funds.
• Be cautious when predicting expenses for housing, transportation, and food, as plans may not unfold as expected.
• Set aside a small amount each month for unplanned expenses.
• Monitor your spending habits to identify areas of overspending and enhance future budget predictions.

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