Monthly Social Security benefits for nearly 63 million Americans will increase 1.5 percent in 2014, the Social Security Administration said Wednesday.
The cost-of-living adjustment, known as COLA, is derived from the government’s measure of inflation. The increase is small, reflecting consumer prices that have not risen too much under the Federal Reserve’s role as watchdog over inflationary forces.
The COLA will be felt by more than one-fifth of the country, including millions of disabled veterans, federal retirees and people who get Supplemental Security Income (SSI), the disability program for the poor.
The cost-of-living adjustment will begin with benefits to more than 57 million Social Security beneficiaries in January 2014. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2013.
Some other changes that take effect in January of each year are based on the increase in average wages.
Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $117,000 from $113,700.
Of the estimated 165 million workers who will pay Social Security taxes in 2014, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.
The Social Security Act provides for how the COLA is calculated. To read more, visit www.socialsecurity.gov/cola.