Social Security benefits to increase 1.5% in 2014

Monthly Social Security benefits will increase Jan. 1, thanks to a 1.5% cost-of-living adjustment, the Social Security Administration said Wednesday.

The 1.5% benefit hike affects more than 57 million retired and disabled workers as well as their spouses, dependents and survivors. The increase will also apply to supplemental security income benefits received by more than 8 million poor and disabled individuals, starting Dec. 31.

The increase will be slightly below last year's COLA of 1.7% and below the average of 2.7% since 1990.

Benefits won't be the only thing that increases next year. Although the payroll tax rate will remain the same, the amount of wages subject to those taxes will increase to $117,000 per year in 2014, up from this year's $113,700.

The average Social Security retirement benefit will increase to $1,294 per month next year as a result of the 1.5% COLA, up from this year's average of $1,275 per month, the SSA said.

For retired couples, the average benefit will increase to $2,111 per month next year, from $2,080 per month this year.

Retirees 65 and older will be relieved to know that while their Social Security benefits will increase slightly next year, their monthly Medicare premium won't.

Most people will continue to pay $104.90 per month for Part B coverage, which covers doctors' bills and out-patient services, the same as this year. Medicare Part A, which covers hospital bills, is free.

Source:  Mary Beth Franklin, Investment News

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