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
Janet Alford
December 26, 2013 at 12:04 pm

I am absolutely in favor of lifting the ceiling on total taxable income paying into Social Security. It is ridiculous that the rich only pay SS tax on $117,000 of income. It would not affect them one iota. They will still be wealthy. If people were taxed for SS on all their income, they would be able to raise the amount of money current people on SS receive. They could live a little better than at the poverty level, and it would not hurt the wealthy at all.

harvey
December 26, 2013 at 12:00 pm

I USE TO BE A REBULICAN BUT AFTER THESE TEA PARTY KNUCKLEHEADS GOT INTO CONGRESS AND SENATE THEY HAVE TRIED TO DESTROY THIS COUNTRY I WILL NEVER VOTE REBULICAN AGAIN . THIS IS DISGUSTING INCREASE FOR SOCIAL SECURITY THEY WE THE TAX PAYERS PAYED IN FOR YEARS .PLEASE TELL ME WHERE IN THE HELL IS OUR INTEREST ON ALL MY MONEY AND YOUR MONEY THAT WE PAID IN TO OUR SOCIAL SECURITY TRUST FUND .

Roby D. Huddleston,SFC,ret
December 26, 2013 at 9:32 am

People of Congress and the Senate, as well as the higher up officials, the Social Security act was invented to give every WORKING AMERICAN the opportunity to have a retirement fund, the same as if they were paying into an insurance company that offered the same retirement fund option. Over the past sixty years or so our GOVERNMENT that has been elected by whatever means , has stolen the money in the fund and never paid it back, if that were an independent company doing that somebody would be in jail for a long time. HARD WORKING AMERICANS NEED TO RISE UP AND VOTE OUT THESE THIEVES OF OUR MONEY AND TAKE BACK OURGOVERNMENT.

james hamilton
December 26, 2013 at 8:31 am

The only way we can fight back is to show them at the voting poles,and then you don't know who you are getting in office,there all money hungry. thieves to the bone,and I mean to the bone.

Martin
December 26, 2013 at 6:47 am

It is a shame that we get a 1.5% increase, this year and our congressmen get a 5% increase(which they voted for themselves)every year, for doing nothing. Not only do they get a 5% increase, they retire (after serving a half term with a pension in six figures and medical for life, which we pay for). Let them live with the monies the average citizen has to live on. It is time the american public votes these government none performers out of office.

SHARON
December 14, 2013 at 11:14 pm

My son who is 38.He is a brittle diabetic ,kidney failure,blind in one eye and his heart has been affected Has applied and been denied 3 times.Any time he has gone to work he gets real sick and ends up getting fired. Tennessee is a right to work state and i was told if they can hire you they can fire you. They do not do that for missing work of course.He does not have any health insurance and has problems getting his prescriptions. I feel helpless. DO NOT KNOW HOW TO HELP HIM. I DO NOT UNDERSTAND.

jon
December 14, 2013 at 8:38 pm

age 54 broke my back in 5 places and can,t get ssi i am a landlord and see people get it at the age of 2. what is wrong with this picture. to many get it that don't deserve it

dorman baird
December 14, 2013 at 6:57 pm

i think we should vote all of them out of office and make sure that all gov. workers including rep. and senators are treated like the average person gets treated and no special treatment for anyone the reps. and senators think they are above the law or should receive special treatment.I don't like the way they keep taking things into their hands like the average persons don.t know how to run their own life and we should pay for whatever they want to do.

milton locklear
December 14, 2013 at 6:51 pm

it a shame we have all of our lives can not get 2.000.00 dollars a month if you wouldcutdown on the welfare we older people could live

richard r rupke
December 14, 2013 at 6:50 pm

my wife hs two hip replacements two knee replacements two shoulder replacements and seizures and you cAN ONLY GIVE HER a TWODOLLAR RAISE. Now she gets a big $257.00 a mounth witch is most is taken for medicare . now she takes home a big $127.00 per mounth. wake up boys and take care of our or get the hell out of office.

Add a comment

(Comments may take 5-10 minutes to appear)