Retirement Blog

Finance Blogs » Retirement Blog » Social Security rising 1.5%

Social Security rising 1.5%

By Jennie L. Phipps ·
Wednesday, October 30, 2013
Posted: 3 pm ET

Social Security confirmed today that the average cost of living adjustment, or COLA, will be 1.5 percent in 2014 -- one of the lowest increases since the program was first adjusted for inflation in 1975.

To put this in perspective: In 1987 and 1999, the COLA was only 1.3 percent. There was no adjustment in either 2010 or 2011. The largest adjustment was in July 1980, when inflation drove up benefits 14.3 percent.

The average Social Security payment for an individual will rise $19 a month from $1,275 to $1,294. The average couple will get $31 more, their benefit rising from $2,080 to $2,111.

In some years, the Social Security increase brought about by the COLA was eaten up by an increase in Medicare Part B, which automatically is subtracted from most people's Social Security payments. In 2014, Medicare Part B, which covers doctor's office visits, won't rise from its current level of $104.90. That's good retirement planning news.

If you are strictly on the paying end of this and not yet ready for retirement, maximum taxable earnings on which Social Security payroll taxes are levied will rise in 2014 to $117,000, up from $113,700 in 2013. To qualify for Social Security, you must work a total of 40 quarters, earning at least $1,200 a quarter in 2014, up from $1,160 in 2013.

If you are between 62 and full retirement age -- 66 for people turning 62 in 2014 -- and you continue to work while claiming, you will have to pay back a portion of your Social Security payments if you earn more than $15,480 in 2014. That's up from $15,120 a year in 2013. The year that you reach full retirement age, you can earn as much as $41,400 without penalty, an increase of $1,320 from 2013.

The COLA also affects benefits for federal government retirees, disabled veterans and people who get Supplemental Security Income, the disability program for the poor.

Opposition to proposed COLA changes

Many organizations supporting improvements to Social Security are using today's announcement as an opportunity to explain why they think this year's COLA is unfair to middle-income people who are dependent on the program. They are particularly opposed to proposals to adopt the Chained Consumer Price Index, or Chained CPI, which would further reduce Social Security COLAs. A poll released by Democracy for America says that people across the political spectrum reject the Chained CPI, with 74 percent opposing it in red states like Kentucky; 64 percent against it in blue states like Hawaii; and 70 percent opposing it in swing or purple states like Iowa.

Another survey by the Senior Citizens League says that more than 78 percent of people older than 65 either favor, or somewhat favor, requiring workers with incomes higher than $117,000 in 2014 to pay Social Security taxes on all of their wages. If that were the case -- and people making more than $117,000 received no additional benefit from their additional taxes, the Social Security's Office of the Chief Actuary says the deficit would disappear. If there were no maximum earnings cap and additional benefits were paid to high earners, about 43 percent of the shortfall would be eliminated.

If we raised the cap on Social Security taxable income, how much -- if any -- additional Social Security benefits should be allocated to people who earn more than $117,000 a year? Or should this be a straight tax increase with no benefit increase to high earners?

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
November 07, 2013 at 8:47 am

this % should be given to the cabinet members and the president..... ...... last 2 yrs no cola and now this???????? stop giving to the people who are not working, make sure they are checking for jobs. too many people won't work for $8 or $9 dollars, so they will milk it and collect soc sec...

larry smith
November 07, 2013 at 8:39 am

How pittyful I know of at least ten people that make over $75.000 a year, that don't pay one penny of tax, and get food stamps, or SSI, AND ON MEDICADE.

November 07, 2013 at 6:53 am

maybe its time all of you stop crying and start knoken on doors on election day no more 2 party sys vote for the record not demercrats or republicons

November 07, 2013 at 6:44 am

Its time to do what is necessary for social security recipients to be taken care of and stop giving our money to people who never paid into the system. Its amazing how the government can give out bonuses and larger pay raises to federal workers, also I am offended to have Medicare lumped into the same conservation as Medicaid. Medicare was paid by the recipients, not a free ride. Medicaid never seems to run out of money.

November 07, 2013 at 6:37 am

Great comment

Walter Barnes
November 07, 2013 at 5:53 am

If you paid back the money the past president took out to make the short fall on there spending. We wood not be were we are at. To pay people who have not paid one penny in taxes is a crime it say crime don't pay. You have drug dealer with a retirement and health plain that is free. Let one get shot and they get free health care and a check every month.

November 07, 2013 at 2:57 am

Maybe if we stopped paying people who are dead, there maybe $130
million dollars so the average person could be paid what they put in all the years they worked. What's wrong with this picture!!!

louveta warner
November 07, 2013 at 1:06 am

what about disabilty do we get a rise to an why do we have to pay taxs on are money weve aready paid when we eared it its not far we all have work hard to get to this poit in life an we are worse off then befor for the none working baby making pepole to set back a drow are money an were the ones that eared it an that get a taxs check at the end an never eared it to even get one now you tell me wonts wroge with this picture you need to get all those dead beets off there bhins an get a job an they dont work they dont food stamps checks or any help from us taxs paying people an we do with out that we worked for an that will help every one its time to take a stand for USA people an stop giveing are money to none amercans an feed are familys we got love ones dieing evry day no food no meds an why CAN PLEASE TELL ME

End the Ponzi Scheme
October 31, 2013 at 11:51 am

How about end the Ponzi scheme, use the "trust fund" dollars to pay out to those who have already earned benefits, and let the rest of us do better on our own retirement plan.

Stop calling social insecurity a retirement plan, it's not, it's a backstop to prevent the elderly from starving. If you really don't plan for your retirement, why should I have to support your "lifestyle" in retirement? It's become a retirement plan because boomers have zero self control, many spending every last dime as they made it.

It's outright theft if you increase the tax with no comparable benefit increase. Some of the proposals of unlimited income tax, with benefits diminishing over the current cap level. Why do I pay the same rate on the income, yet see minimal 5% increase under some plans? Income redistribution, the liberal dream.

jane smith
October 31, 2013 at 6:56 am

I don't think it is quite fair to penalize the high incomer earner. it is like robin hood, to rob the rich and give to poor. there should be a cap for how much you pay for SS tax to be fair.