Social Security made it official with an announcement Oct. 30 that the Social Security benefit increase for disability and retirement recipients will be a miniscule 1.5 percent in 2014, which is down from a 1.7 percent increase in 2013.
The annual cost-of-living adjustment (COLA) increase averages out to be an extra $19 per month. The COLA formula is based on the government’s measure of inflation. The average Social Security retirement beneficiaries in 2013 received $1,275 per month. That will increase to $1,294 in 2014.
Although any increase to Social Security checks is welcome by retirees and disabled workers, the fact remains that the 2014 increase is one of the lowest in years and well below the average annual increase of 2.7 percent since 1990.
The increase will impact the more than 57 million Americans receiving either Social Security retirement or disability benefits and the more than 8 million people who collect Supplemental Security Insurance (SSI) payments.
Benefit payments won’t be the only thing increasing in 2014, according to Social Security. Although the payroll tax rate will remain the same, the amount of wages subject to those taxes will increase to $117,000 in 2014, compared to $113,700 in 2013.
Social Security has used COLA since 1975 when, in 1972, Congress enacted the provision as part of Social Security amendments. Prior to this legislation, benefits were only increased when Congress enacted special legislation.
Despite the fact that many Social Security benefit recipients will probably be disappointed about the small increase to benefits in 2014, there is some good news. Retirement and disability beneficiaries are also qualified for Medicare, which will see the majority of people pay $104.90 per month for premiums, which was the same amount paid in 2013.
For more information about the 2014 increases click here.
