Social Security Benefits to Rise by 1.5% in 2014

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Social Security COLA (FILE - In this Feb. 11, 2005, file photo rolls of blank social security checks run through printers and ar
Bradley C. Bower/AP
By STEPHEN OHLEMACHER

WASHINGTON -- Social Security benefits for nearly 58 million people will increase by 1.5 percent next year, the government announced Wednesday.

The increase is among the smallest since automatic adjustments were adopted in 1975. It is small because consumer prices haven't gone up much in the past year.

The annual cost-of-living adjustment, or COLA, is based on a government measure of inflation that was released Wednesday morning.

The COLA affects benefits for more than one-fifth of the country. In addition to Social Security payments, it affects benefits for millions of disabled veterans, federal retirees and people who get Supplemental Security Income, the disability program for the poor.

The amount of wages subject to Social Security taxes is also going up. Social Security is funded by a 12.4 percent tax on the first $113,700 in wages earned by a worker, with half paid by employers and the other half withheld from workers' pay.

The wage threshold will increase to $117,000 next year, the Social Security Administration said. Wages above the threshold are not subject to Social Security taxes.

About 165 million workers pay Social Security taxes. About 10 million earn wages above the threshold, the agency said.

Social Security pays retired workers an average of $1,272 a month. A 1.5 percent raise comes to about $19.

"By providing protection against inflation, the COLA helps beneficiaries of all ages maintain their standard of living, keeping many from falling into poverty," said AARP executive vice president Nancy LeaMond. "The COLA announced today is vital to millions, but at an average of just $19 per month, it will quickly be consumed by the rising costs of basic needs like food, utilities and health care."

The COLA announcement had been scheduled for two weeks ago. It was delayed because the Bureau of Labor Statistics didn't issue the inflation report for September during the partial government shutdown.

Since 1975, annual Social Security raises have averaged just over 4 percent. Next year will mark only the seventh time the COLA has been less than 2 percent, including several recent ones.
This year's increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low.

In some years, part of COLA has been erased by an increase in Medicare Part B premiums, which are deducted automatically from Social Security payments. But Medicare announced Monday that Part B premiums, which cover doctor visits, will stay the same in 2014, at $104.90 a month for most seniors.

By law, the cost-of-living adjustment is based on the consumer price index for urban wage earners and clerical workers, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.

The COLA is calculated by comparing consumer prices in July, August and September each year to prices in the same three months from the previous year. If prices go up over the course of the year, benefits go up, starting with payments delivered in January.

Lower prices for gasoline are helping keep inflation low, said Polina Vlasenko, a research fellow at the American Institute for Economic Research.

The average price of a gallon of regular gasoline has dropped over the past year from $3.53 to about $3.28, according to the automotive club AAA. Overall transportation costs have dropped by 2 percent in the past year, according to the Bureau of Labor Statistics.

Prices for food and beverages have gone up by 1.4 percent, while clothing costs have gone up by 0.7 percent.

Automatic COLAs were adopted so that benefits for people on fixed incomes would keep pace with rising prices. Some advocates for older Americans, however, complain that the COLA sometimes falls short, especially for people with high medical costs.

Over the past year, medical costs went up less than in previous years but still outpaced other consumer prices, rising 2.4 percent, according to the government report. Housing costs went up 2.3 percent.

-Associated Press reporter Christopher S. Rugaber contributed to this report.


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November 29 2013 at 7:06 AM Report abuse rate up rate down Reply
eghnw27

HAPPY HALLOWEEN EVERYONE. IT IS JUST ANOTHER\'S BEGGARS NIGHT TO MOST OF THOSE WHO BEG. LOOKS LIKE THE SEASON
FOR IT. BE SURE TO DRESS FOR THE OCCASION.!!!!

October 31 2013 at 12:35 PM Report abuse rate up rate down Reply
nthereoff

Remember a few years back ,no raise for two years in S S. No inflationis so they said. Not happy with my friends at AARP they didn't seem to mind..

October 31 2013 at 10:27 AM Report abuse rate up rate down Reply
nthereoff

Lower gasoline prices are going down? When it reaches $1 dollars a gallon let me know. There notting cheap being around $3 a gallon.

October 31 2013 at 10:21 AM Report abuse rate up rate down Reply
pdbliz

BUSH IS GONE.!!!!! BUSH IS GONE.........It is very sad......6 years into the president he takes NO BLAME ON NOTHING,,,,HE KNOWS NOTHING ABOUT NOTHING.!!!
HELL......I CAN DO THIS,,,VOTE ME IN.!!!!!!
Democrate voters are no learning that ,,,,they may have been lied to.!!!
No,,,,,THEY NOW KNOW THEY WERE LIED TOO.!!!!!
DEMOCRATES,,,,,,YOU NOW OWN IT,,,,OBAMA CARE IS YOUR BABY.!!!!!!

October 31 2013 at 9:22 AM Report abuse +3 rate up rate down Reply
pdbliz

Harold.......YOUR OPPINION DOES COUNT AND IT MEANS ALOT TO ME TO READ IT.!!!!!
My dad said back in the Cold War Days,,,,,,If Russia ever attacked the U.S.....may be the first hit would be Washington DC...
I believe he was right.!!!!! Wipe Washington off the map.!!!!

October 31 2013 at 9:16 AM Report abuse +1 rate up rate down Reply
HAROLD

MY COMMENT MEANS NOTHING WITH THE PEOPLE THAT ARE ELECTED THEY JUST DO WHAT OBAMA WANTS HIS WAY OR NO WAY HE HAS US IN A MESS WE REALLY NEED TO GET NEW PEOPLE IN WASHINGTON I VOTE EVERY ELECTION AND I MIGHT AS WELL NOT VOTE BUT THEN I COULD NOT VOICE MY OPINION HAROLD

October 31 2013 at 8:49 AM Report abuse +3 rate up rate down Reply
Fred

Thanks for the table scraps, after your raise I take it thats all that is left.

October 31 2013 at 8:47 AM Report abuse +1 rate up rate down Reply
Handleys

This figure was announced months ago. Why is it a news story today?

October 31 2013 at 7:23 AM Report abuse +1 rate up rate down Reply
1 reply to Handleys's comment
willypfistergash

Politics

October 31 2013 at 10:26 PM Report abuse rate up rate down Reply
cherylelko

Interesting..... they are increasing my SS 1.5% .... they also RAISED the cost of my Medicare Premiums 10%. My SS check raise is $15.09.... increase of Medicare insurance is $15.37.

The Government thinks we won\'t notice they are putting the SCREWS to us !!

October 31 2013 at 5:46 AM Report abuse +6 rate up rate down Reply
1 reply to cherylelko's comment
pdbliz

WELFARE PEOPLE WILL GET A 12.5 % RAISE....
SOMETHING IS WRONG HERE.!!!!!!! FOOD GOING UP....EBT CARD PEOPLE GETS A RAISE....
AVERAGE WORKING PEOPLE,,,,1.5% SOMETHING IS WRONG HERE.
PEOPLE,,IT IS TIME TO STAND YOUR GROUND.!!!!!!!!!

October 31 2013 at 9:18 AM Report abuse +2 rate up rate down Reply