Next increase in Social Security benefits for retirees – How you can earn more money

Social Security benefits are critical for millions of retired Americans who rely on these monthly payments to keep pace with inflation and cover their living expenses. On average, retired workers receive up to $1,900 per month. Still, this amount could vary based on their full retirement age, working history, and Social Security taxes paid throughout their professional lives. Every year, beneficiaries receive a boost in their Social Security benefits due to the cost of living adjustment (COLA), announced in October. Learn here about how retired workers can earn more money in their monthly payments. 

How does the cost of living adjustment impact Social Security benefits?

Since 1975, general increases in Social Security benefits have been based on increases in the cost of living, as measured by the Consumer Price Index. These increases are known as cost-of-living adjustments (COLAs). Average Social Security benefits typically increase monthly because new beneficiaries joining Social Security’s rolls typically receive higher Social Security benefits than those leaving. Annual cost-of-living adjustments, or COLAs, provide sudden increases that disrupt this progressive rise in average benefits. 

According to the latest projections from The Senior Citizens League (TSCL), the COLA for 2025 is expected to be around 2.6%, which could potentially impact retirees’ finances as this would be one of the lowest COLAs compared to recent years. Despite this bad news for retired Americans, it is important to understand that even if borrowing costs are high right now, investors can obtain the best returns on their investments in a long time, giving seniors and other savers additional options to grow their money right now.

3 strategies for retirees to increase their income and savings

Open a certificate of deposit (CD)

A certificate of deposit (CD) is an excellent way to grow your Social Security benefits, and savings in any economy, but specifically right now. Interest rates on CDs are currently as high as 5.5%, particularly when opening an account with an Internet lender. You might even be eligible for a CD with an APY of 7%. You can make a substantial sum of money just by contributing a portion of your funds to one of these accounts. Just make sure the amount you deposit is comfortable for you, as early withdrawal penalties may result in the loss of all or part of the money you earned.

Open a high-yield savings account

High-yield savings accounts are currently offered at competitive interest rates. Unlike certificate of deposit (CD) accounts, which have term limitations, savers can access and utilize the interest they accrue immediately. Nevertheless, since high-yield savings account interest rates fluctuate, it makes sense to open one now while rates are favorable and there is a substantial opportunity to earn income.  The return you may receive with a high-yield savings account will decrease if interest rates continue to decline or stabilize in 2024, as some have predicted. However, with rates currently near 6%, it is a simple method to increase your profit margin without sacrificing your ability to access your money.

Create a retirement budget

Unfortunately, thousands of retirees do not dedicate enough time to evaluating their annual and monthly budgets, which is critical for knowing their financial condition and identifying cost-cutting opportunities. Since many people don’t know where to start, it is always recommended to analyze how much you spend on different categories, such as housing, groceries, health care, entertainment, and any other expenses to be paid monthly. Understanding your monthly expenses is essential to building a financial budget, especially if you are living in retirement. 

As one of the most important things in retirement is healthcare, don’t forget that you might be spending too much out of pocket for in-home care or Medicare-remaining healthcare expenditures (a Medicare supplementary insurance plan can assist with this). Long-term care insurance may help you save money over time in these situations. Lastly, also spend some time calculating the figures to determine what can be moved, as the amount of money you could save could surprise you.