Retirement Blog

Finance Blogs » Retirement » Social Security rising 1.5%

Social Security rising 1.5%

By Jennie L. Phipps · Bankrate.com
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.
102 Comments
Jacki
November 13, 2013 at 2:37 pm

Any raise is better then none, since every year the Medicare plans charges more for payment. The raise usually covers the rise in the Medicare payment. So we break even, But we don't really break even because the cost of living goes up. What I think is even funnier is I pay tax on my Social Security, which was a tax to begin with. I pay tax on a tax. Need we say more? If we keep this up, we will be just like the other Socialists countries.

Paul Jay
November 13, 2013 at 1:40 pm

My Good Folks:
Social Securtiy was NEVER intended to be a complete retirement plan in-and-of itself. It is meant to SUPPLEMENT the other money you have saved and invested throughout your whole working career. By taking responsibility for your own retirment income, by investing in such vehicles as a 401(k), 403(b), IRA, Annuity, and similar plans, you would not be so dependent upon the small monthly social security check. I worked and invested for over 40 years, and now my social security income represents only about 20% of my total monthly income. Of course, if you failed to plan adequately for your own retirement, then you have no one to blame but yourself, and no choice but to live on what Social Security will pay you. It's really not the Government's fault if you are struggling financially today.

mitch mouchet
November 08, 2013 at 11:07 am

LOOKS LIKE MY COMMENT WAS A BIT TO MUCH TROOTH FOR SOMEONE AND WAS DELETED, SO MUCH FOR OPINIONS A . WE NOW WHO DID WHAT AND WHEN, NEXT ELECTION WILL TELL YOU,

Alicia Johansson
November 07, 2013 at 11:14 pm

The penalty problem. Soc. Sec. Adm. is charging 10% more annually for the Medicare premium from people who started to pay the premium later than their retirement age. And... this penalty is just going up and up every year to the recipient's death. Is this the Soc. Sec. Adm.'s money making plan? Is it really necessary to penalize
poor retirees, who are living on a very small Soc. Sec. monthly check? Is it really difficult to understand by Soc. Sec. workers
why the poorer people are sometimes not able to spend $104 a month
for Medicare as long as they work?
I am very sorry for the Soc. Sec. Adm.
Alicia

Bernie
November 07, 2013 at 9:54 pm

Our biggest problem is we have a 50 year old kid with a credit card that dont have to pay the bills...enough said

philip
November 07, 2013 at 9:53 pm

Government gives us a big raise of 1.5% which is BS do they go shopping for food?Every week food prices go higher,when we get a raise everything goes up the raise does nothing.I live on my social security which is low I am considerd poor,so what does government do they cut out or lower food stamps,can the big shots live on this amount.its time for all americans to run these thiefs out of town.god help us all

Lois
November 07, 2013 at 9:49 pm

I don't know where you get the average person will draw $1294.00 a month. What about us folks that worked for $1.00 an hour when we started working at public work. We do not draw near that amount. It seems the government has forgotten about us. We did not make near the money the ones drawing $1294 so we have been left behind.

Cross
November 07, 2013 at 9:24 pm

After paying into social security for years retirees will receive 1.5% in 2014. According to a reputable magazine article, the food stamp freeloaders will get 6%. I don't get it.

Jimmy
November 07, 2013 at 8:41 pm

I constantly hear about cuts and the end of Social Security/Medicare for the American people. Which is caused by irresponsible spending by these elected officials, which we put in office to work for American tax payers. I never hear anything about cutbacks or loss of any of their benefits/salaries or retirements.

Nana
November 07, 2013 at 8:21 pm

Charlie, I couldn't have said it better myself.

Add a comment

(Comments may take 5-10 minutes to appear)