Social Security benefits to go up by 1.5 percent

National

Social Security benefits to go up by 1.5 percent

Posted:

WASHINGTON (AP) -- Social Security benefits will rise 1.5 percent in January, giving millions of retired and disabled workers an average raise of $19 a month to keep up with the cost of living.

The increase is among the smallest since automatic adjustments were adopted in 1975, and reflects the fact that 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.

"Yea. Whoop-de-do," said Lance Colvin, a retired office worker in Kirkland, Wash. "That's my opinion."

Automatic COLAs were adopted in 1975 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.

Michael Hartzog of Charleston, S.C., said the small COLA will make it difficult to keep up with his wife's medical bills.

"We'll probably need to reduce our spending even more," Hartzog said. "I don't know exactly how."

Hartzog, 63, is retired after working 38 years at the Social Security Administration in South Carolina. He said his federal pension and Social Security benefits are affected by the COLA.

The COLA affects benefits for more than one-fifth of the country: nearly 58 million Social Security recipients, as well as benefits for millions of disabled veterans, federal retirees and people who get Supplemental Security Income, the disability program for the poor.

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

Benefits are based on lifetime earnings. The more you make, the higher your benefit - to a point. For someone who retired this year at age 66, the maximum monthly benefit is $2,533. That person will get a raise of about $40 a month.

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.

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 with 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.

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. This year's increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low.

"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."

Lower prices for gasoline are helping keep inflation low. 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.

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 Bureau of Labor Statistics. Housing costs went up 2.3 percent.

To save money, Congress has considered adopting a new measure of inflation called the chained CPI, which would, on average, result in slightly smaller COLAs most years. President Barack Obama has supported the idea in previous budget talks with House Speaker John Boehner, R-Ohio, making it one of the few issues the two agree on.

Many economists argue that the chained CPI is more accurate because it assumes that as prices increase, consumers switch to lower cost alternatives, reducing the amount of inflation they experience. The White House has called it a "technical change," though many advocates for older Americans are pledging to fight it.

The issue could come up again as part of a new round of budget talks that began Wednesday on Capitol Hill. Following the recent government shutdown, House and Senate leaders formed a new committee that is trying to reach a budget deal for next year and beyond. The committee has a deadline of mid-December.

If the chained CPI were in use today, next year's COLA would still be 1.5 percent. That's because the differences between the two inflation measures are smaller when the COLA is small.

"Proponents of a stingier COLA formula claim the chained CPI is more accurate. However, in truth it is a benefit cut for millions of current and future retirees, veterans, people with disabilities and their families," said Max Richtman, who heads the National Committee to Preserve Social Security and Medicare.

---

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

  • Email Alert Sign Up

    Sign up here to receive breaking news stories from KSWT.com and morning updates to your email inbox.

    * denotes required fields


    Thank you for signing up! You will receive a confirmation email shortly.
Go to KSWT-TV's Facebook page
  • Most Popular StoriesMost Popular StoriesMore>>

  • Man on I-5 overpass causes huge East LA backups

    Man on I-5 overpass causes huge East LA backups

    A man on an overpass has brought the hours-long shutdown of a major freeway, causing massive traffic backups through the east side of Los Angeles during Friday rush hour.More >>
    A man on an overpass has brought the hours-long shutdown of a major freeway, causing massive traffic backups through the east side of Los Angeles during Friday rush hour.More >>
  • Mercury rising

    Mercury rising

    Living in the southwest, warm temps are just part of life; but, lately as the mercury begins to rise it has proven to be too much for some. Emergency crews have been called out fordehydrations calls and area utilities have recorded larger than normal power uses. Some companies have opened their doors offering passer by’s a cool zone and even the Salvation Army has scoured the city looking for people in aide to help them get hydrated and get some shelter from the sun.More >>
    Living in the southwest, warm temps are just part of life; but, lately as the mercury begins to rise it has proven to be too much for some. Emergency crews have been called out fordehydrations calls and area utilities have recorded larger than normal power uses. Some companies have opened their doors offering passer by’s a cool zone and even the Salvation Army has scoured the city looking for people in aide to help them get hydrated and get some shelter from the sun.More >>
  • Yuma to Hold Back to School Rodeo Saturday

    Yuma to Hold Back to School Rodeo Saturday

    Yuma, AZ - The City of Yuma invites the community the Inaugural Back To School Rodeo, Saturday, July 28, 10 a.m. to 3 p.m at the Civic Center, 1440 W. Desert Hills Drive The Back to School Rodeo is aMore >>
    The City of Yuma invites the community the Inaugural Back To School Rodeo, Saturday, July 28, 10 a.m. to 3 p.m at the Civic Center, 1440 W. Desert Hills Drive. The Back to School Rodeo is a free event that will bring more than 50 community organizations under one roof to provide a one-stop destination for area children's educational needs. Organizers say it is designed for grades K-8. More >>
  • Border wars: Drop in apprehensions

    Border wars: Drop in apprehensions

    In Border Wars news the Yuma Sector has become the proverbial diamond in the rough when it comes to border security. According to the latest numbers from the Department of Homeland Security Yuma Sector has reported a record drop in apprehensions compared to apprehensions a decade ago. According to the latest stats apprehensions dropped 96 percent since 2005. Back then the Yuma Sector apprehended 138,438 people; during fiscal year 2013 they apprehended just 6,105. Many factors can be taken int...More >>
    In Border Wars news the Yuma Sector has become the proverbial diamond in the rough when it comes to border security. According to the latest numbers from the Department of Homeland Security Yuma Sector has reported a record drop in apprehensions compared to apprehensions a decade ago. According to the latest stats apprehensions dropped 96 percent since 2005. Back then the Yuma Sector apprehended 138,438 people; during fiscal year 2013 they apprehended just 6,105. Many factors can be taken int...More >>
  • Father beats accused child abuser, Daytona police say

    Father beats accused child abuser, Daytona police say

    Police say a Daytona Beach father beat an 18-year-old man unconscious after finding him sexually abusing his son. Authorities say the father called 911 early Friday after he walked in on the alleged abuse.Frolander motionless on the living room floor. He had several knots on his face and was bleeding from the mouth. Police said the father -- who was not identified -- told investigators he walked in as Frolander was abusing the boy. Police did not release the boy's age, but Frolander is charge...More >>
    Police say a Daytona Beach father beat an 18-year-old man unconscious after finding him sexually abusing his son. Authorities say the father called 911 early Friday after he walked in on the alleged abuse.Frolander motionless on the living room floor. He had several knots on his face and was bleeding from the mouth. Police said the father -- who was not identified -- told investigators he walked in as Frolander was abusing the boy. Police did not release the boy's age, but Frolander is charge...More >>
  • Police still investigating after burglar killed

    Police still investigating after burglar killed

    Friday, July 25 2014 9:32 PM EDT2014-07-26 01:32:57 GMT
    An 80-year-old man who came home to find two burglars said he shot and killed one of them despite her pleas that she was pregnant, but it's the woman's alleged accomplice who has been arrested on suspicion...More >>
    Prosecutors Friday were waiting for the results of a police investigation into the killing of a burglar by an 80-year-old California homeowner who says he shot the woman in the back as she fled his home and ran down an...More >>
  • National

    Obama warns of delay in social sec. checks and veteran's benefits

    Obama warns of delay in social sec. checks and veteran's benefits

    Web Producer: Lucy Valencia, Assignment Desk Editor WASHINGTON (AP) -- Declaring "we are not a deadbeat nation," President Obama warned on Monday that Social Security checks and veterans' benefits willMore >>
    Declaring "we are not a deadbeat nation," President Obama warned on Monday that Social Security checks and veterans' benefits will be delayed if congressional Republicans fail to increase the government's borrowing authority in a looming showdown over the nation's debt and spending.More >>
  • Yuma

    Man tries to smuggle more than $500,000 worth of cocaine into U.S. from Mexico

    Man tries to smuggle more than $500,000 worth of cocaine into U.S. from Mexico

    ANDRADE, Calif. (13 On Your Side) - A Yuma man is busted for trying to smuggle more than $500,000 worth of cocaine into the United States from Mexico. Customs and Border Protection officers discoveredMore >>
    A Yuma man is busted for trying to smuggle more than $500,000 worth of cocaine into the United States from Mexico.More >>