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.
Jerry Surber
December 26, 2013 at 10:11 pm

I still cannot understand how or why our ss money was taken out of a trust fund and put in to a general fund for gov to use for other needs , there needs and no one impeeched them or put them in prison for the biggest highes in history or mankind to live with?

tell it like it is
December 26, 2013 at 9:10 pm

send all the gold diggers home and start all over. we cant vote them out because we are out numbered by the foreign voters who the government is giving everthing free. we better all start sticking together or we will be taken over and your great grand children can thank you. WAKE UP TRUE AMERICANS


Charles Cross
December 26, 2013 at 8:30 pm

I would like to see these overpaid politicians just try to live on a fixed income such as I have. They spend more on dinners than I make when they are trying to con others into their way of thinking ...1.5 percent is a slap in the face......

gene hendrickson
December 26, 2013 at 8:09 pm

With this big increase,$21, I can finally go on vacation in my back yard. If I still have a house.

December 26, 2013 at 6:55 pm

the only way you are going to get rid of the wasteful spending, is get rid of the wasteful spenders. ther should be a term limit on all political offices, just as on the presidents. Not more than 4 years that way they could only do 50% harm not 300%.

B Edwards
December 26, 2013 at 3:13 pm

1.5 I suppose we pensioners should jump for joy our great government has'ent decided to take away our benefits that we or at least some of us have worked so hard to pay in. Instead of giving billions of our hard earned moneys to foreign countries keep it here and take care of our poor or disabled people, where it be our vets or our underprivileged and less fortunate and especially our elderly people. remember some day all of us are goeing to be in their shoes if were lucky enough to live to make it to old age. Help these then see what's left. The main thing is take care of your on first then if we have any left help the other countries with that, not the other way around.

December 26, 2013 at 2:58 pm

Social Security is going to pot under this Administration. Money paid into everyone's accounts have been plundered to pay for other "social programs" including Obamacare. My "increase" amounted to a $5 decrease over last year and every time the Fed prints money, the inflation rate hits it even more.

The entire government concept of tax and spend itself rich has never worked and it never will. Our politicians; not just Obama; are looting America's future. The sooner people recognize this fact, the sooner we can put the Fed and its owners where they belong, in jail and then into the dust bin of history.

December 26, 2013 at 2:14 pm

But then, Medicare is raised more than the SS increase! Keep your increase and do not raise Medicare!
December 26, 2013 at 1:05 pm

Well, I guess we agree, that the politicians in office' should be replaced. The only problem is we can't do all,so, we vote in some new ones, who mix with the old. The old ones convert the new ones to there way of business, we end up with more corrupt politicians. I believe we should save enough, stop everything, work, travel, etc. (Strike on the US Government). Maybe they would understand, we are fed up with there performances. Also, why should they be able to give them selves a raise, when they work for us. I was never able to give myself one.

K Youngquist
December 26, 2013 at 12:59 pm

Our Medicare premiums increased more than our social security benefit. Does that mean there was deflation in the rest of the economy? It seems like food prices increased quite a bit. The way the government computes inflation merely continues the debacle of its credibility.