Retirement Blog

Finance Blogs » Retirement Blog » Social Security up 1.5 percent in 2014?

Social Security up 1.5 percent in 2014?

By Jennie L. Phipps ·
Monday, August 26, 2013
Posted: 5 pm ET

Plug this into your retirement planning budget for 2014: The Congressional Budget Office has estimated that the cost of living adjustment, or COLA, for 2014 will be 1.5 percent, slightly less than 2013's 1.7 percent. The official announcement will be made in the middle of October.

The COLA not only affects Social Security, it also sets the annual increases for federal retirees; Supplemental Security Income, known as SSI; military retirement, and veterans' pension benefits. Plus, eligibility for Medicare extra help, Medicaid and eligibility for federal and many state food and housing assistance programs also are tied to the annual COLA.

If you were receiving the average worker's Social Security retirement benefit of $1,224 in July, your increase, effective Jan. 1, would likely be $18.36 per month or about $220 a year. Don't spend it all in one place.

In his 2014 budget request, President Barack Obama proposed using a different COLA calculation, the chained CPI, as a way to help control the cost of Social Security. The House Republican Study Committee also has urged adoption of the chained CPI. With bipartisan support, there is a good possibility the chained CPI could become reality as early as 2015 -- it's too late for 2014.

If the chained CPI were to be implemented -- this is just a hypothetical -- the 2014 COLA increase would be about 0.25 percent lower, or 1.25 percent, in 2014. That would make next year's increase for the average Social Security recipient about $15 a month -- $3 lower than it will be with the current calculation. Over 10 years, the National Association of Retired Federal Employees estimates that the average Social Security recipient would lose a total of $240.

The good news is that the chained CPI would make a significant difference in the amount of money the federal government spends on Social Security. The Congressional Budget Office estimated in March that if the chained CPI were implemented in 2014, that it would save Social Security $127.2 billion from 2014 to 2023.

That's a step in the right direction.

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.
October 02, 2013 at 1:20 pm

The social Security recipient has at least put money into their social security retirement unlike the entitlement generation who expects to collect disability without ever putting a cent into the system. Welfare takes and takes yet puts nothing into the system but expects us to take care of them and their families. All free programs yet the cost is great to the working public.
Subsidized housing
Food Stamps
Health Care

October 02, 2013 at 9:15 am

This country is being destroyed--Obamacare is causing job loss-
and full time employees made into part time employees--This means less money going into Social Security yet we give foreign
aid all the time--USA is all they should be concerned about. Let other countries take care of themselves...............

William Robison
October 01, 2013 at 8:38 pm

Iam a conservative and a staunch Republican who just wrote some comment about COLA's etc. but my letter was not allowed to go thru as it must have rubbed the Obamaites followers the wrong way. Iam not surprised at anything they might do anymore. Be careful folks and watch your back at all times. This letter will no doubt be cut off too as my first one was..

October 01, 2013 at 2:46 pm

It is not a step in the right direction. Chained CPI over a lifetime will reduce earninigns particularly in a high inflation environment. Better to raise the Maximum taxable eanrings as a quick fix.

September 30, 2013 at 11:09 am

What difference should it make if I pay into social security, draw it, and keep working? That's my choice! If I pay into it I should get it regardless of other retirements and income. If you're too lazy to keep working then that's your problem , not mine. (corrected for errors)

September 30, 2013 at 11:07 am

What difference should it make if I apy into social security, draw it and keep working? That's my choice! If I apy into it I should get it regardless of other retirements and income. If you're too lazy to keep working then tha't your problem , not mine.

September 30, 2013 at 8:56 am

There is more than SS going on that has ruin SS .
For instant you have people that draw the max from SS then get as much if not more from separate funds and still work.
Just plane and simple stop double and triple dipping and giving to those who aren't Americans never worked a day in the US and we would have plenty.
Plus stop letting people draw for grandchildren who don't even live with them.

Joyce Gebhardt
September 29, 2013 at 9:37 pm

I would rather see a cut in Social Security than see our government go bankrupt. I think we need some housewives in there balancing the budget--you don't spend what you don't have!!

September 29, 2013 at 3:55 pm

Stop ALL SS COLA increases PERMANENTLY. Social Security was created as a SUPPLEMENT to other funds/investments that all workers should have been saving for their retirement. It was never intended to be someones sole leans of support. Anyone who complains about not being able to live of of SS has themselves to blame. STOP all SS increases PERMANENTLY, and cap all payouts at what the beneficiary contributed with an averaged 2% annual return.

September 29, 2013 at 7:32 am

How is this possible? The Fed claims there is no inflation. :-)