Social Security

SSASix big things are affecting Social Security this year…do you know about them?

The Social Security monthly payments are rising – but not by much
In 2014, the average payment will increase by $19 due to a 1.5% cost-of-living adjustment, which is one of the smallest COLAs in the history of the SSA.1, 2
Chained Consumer Price Index is not yet being used to determine COLAs
Supporters think that if Social Security COLAs were based on chained CPI could reduce the program’s shortfall by as much as 20% in the long term.3, 4
The CPI-W is still the CPI of record, so to speak
The Congressional Budget Office says that COLAs could be about 0.3% smaller if they were based on chained CPI.3, 4
Social Security maximum monthly benefit is increasing
In 2013, a Social Security recipient who had reached full retirement age could claim a maximum monthly benefit of $2,533. This year, the limit will be $2,642.1
Social Security’s annual earnings limit is increasing as well
This limit is only faced by Social Security recipients who have yet to reach the month in which they turn 66. In 2013, retirees younger than 66 were able to earn up to $15,120 before having $1 in retirement benefits temporarily withheld for every $2 above that level. In 2014, the annual earnings limit rises to $15,480.1 Please note that the SSA does not count investment earnings, interest, pensions, annuities and capital gains toward the current $15,480 earnings limit.5
On the job, the wage base for Social Security taxes is rising
American workers will pay a 6.2% payroll tax on the initial $117,000 of their incomes in 2014. The 2013 payroll tax cap was set at $113,700. About 6% of working Americans will pay more in Social Security tax this year as a consequence of this seemingly insignificant adjustment.1, 4

Find out when you’re eligible to receive full benefits, or learn more here!

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Citations:
1 – money.usnews.com/money/blogs/planning-to-retire/2013/10/30/how-social-security-will-change-in-2014 [10/30/13]
2 – blogs.marketwatch.com/encore/2013/10/30/social-securitys-2014-raise-a-modest-1-5/ [10/30/13]
3 – baltimoresun.com/news/opinion/bs-md-federal-chained-cpi-20131106,0,7051573,full.story [11/7/13]
4 – aarp.org/politics-society/advocacy/info-02-2013/the-chained-consumer-price-index-explained.html [2/13]
5 – https://ssa.gov/pubs/EN-05-10069.pdf [2/26/14]

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