If you’re among the retirees worried about 2025’s Social Security cost of living adjustment, you’ll have to sit tight a while longer because the amount of the adjustment hasn’t yet been released.
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That’s because COLAs are based on inflation data from the third quarter of the previous year. The third quarter ends on October 31, after which the Social Security Administration will calculate the COLA for 2025. The new amount will go into effect at the end of December, so you’ll see it in your January 2025 benefit payment.
The nonpartisan Senior Citizens League projected the 2025 COLA will amount to 2.57%, down from 3.2% in 2024. The League considered falling inflation — it dropped from 3% in June to 2.9% in July — in its calculation.
The problem is that inflation doesn’t affect the cost of all goods and services in the same way. For example, while the overall inflation rate was 2.9% in July, shelter costs were 5.1% higher than a year ago, car insurance was up 18.6% and medical care was up 3.2%, according to the Consumer Price Index for July.
If you’re a retiree worried that the 2025 COLA increase won’t be enough to cover your rising expenses, here are five things you can do now to make the most of your Social Security check.
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Create a Budget
A budget shows you exactly what’s coming in, and just as important, what’s going out. To make one, list all your monthly expenses and then divide them into “needs,” such as food, shelter and healthcare, and “wants,” such as entertainment and other nonessentials. Then subtract those costs from your income to see where you stand.
You may not need to make drastic changes, but perhaps there are one or two areas where you could reduce your spending.
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Shop Smarter
One way to cut back when shopping is to make and stick to a list. That way, you eliminate impulse spending that often leads to overspending and regret.
“If you have a weakness for retail therapy, consider imposing a cool-off period on yourself to try to avoid impulse buys — like waiting a week before making an unplanned purchase,” Fidelity advised.
Another way to shop smarter is to buy groceries in bulk. But be careful about how you store them.
“Portion out perishable food items like meat and freeze them before they spoil,” Fidellity recommended.
Review Your Insurance Policies
Skyrocketing insurance costs warrant careful review of your policies to make sure you’re getting the best rates you qualify for, and that your coverage reflects your post-retirement needs.
Shopping around for coverage, perhaps by requesting rate quotes from an insurance-comparison site, is one way to instantly reduce your insurance costs. Eliminating unnecessary coverage is another.
Move to a Cheaper State
The cost of living can vary greatly from state to state — even city to city within the same state. A move to a location with lower rent — or lower property taxes, if you’re a homeowner — can pay for itself quickly. Also consider income taxes, including tax on pensions and Social Security benefits. Not all states impose them.
Downsize Your Home
You may look around and see that you have a bigger home than you need — and the bigger utility and maintenance expenses that go with it. Downsizing to a smaller, less expensive place can save you money on monthly expenses and provide a lump sum of cash that can potentially help finance years of retirement.
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This article originally appeared on GOBankingRates.com: 5 Things Retirees Can Do Now If You’re Worried About 2025’s Social Security COLA
