As the year comes to a close, many face the challenge of balancing holiday preparations with the need to assess their financial outlook for the coming year.
For those relying on Social Security as a significant source of retirement income, the end of the year is a critical time to review benefits and make necessary financial changes for 2025.
By taking a moment to assess the boost, retirees can set up a budget for the new year and start 2025 on the right financial foot. Plus, there are lesser-known strategies that could add up to $22,924 more annually in retirement income—an opportunity many retirees overlook.
Social Security Boost: Impact On 2025 Finances
Social Security recipients will see a cost-of-living adjustment (COLA) in 2025, with benefits rising by 2.5%. However, the cost of Medicare Part B will also see an increase, from $174.70 to $185 per month. For those enrolled in both Medicare and Social Security, these rising premiums could eat into the COLA, resulting in a smaller net increase.
The Social Security Administration (SSA) will send out letters detailing the changes to monthly benefits. The information is also available online through SSA.gov. It allows recipients to see exactly how much their monthly benefit will increase.
Making Smart Adjustments For The New Year
Once the new benefit amount is understood, it's time to evaluate whether any changes need to be made. If finances are tight and managing living expenses has been difficult, there are several strategies to consider for 2025:
Supplementing Income: Joining the gig economy or taking on part-time work.
Downsizing: If housing costs are too high, move to a smaller space.
Car expenses: Giving up a car or switching to a more affordable vehicle.
Reevaluating Medicare Coverage: Those enrolled in Medicare can switch plans during open enrollment, which ends on Dec. 7. Lowering Medicare premiums could free up additional funds.
Starting the year with a solid financial plan can make a big difference. Taking the time now to assess how Social Security adjustments fit into the overall budget and planning for any necessary changes will set the stage for a more secure financial future.
