by Brad Myler
The Social Security Administration launched a press release on October 30th that stated that benefits would increase by 1.5% for the year 2014. This will affect nearly 63 million Americans who are receiving SSDI or SSI application benefits. These beneficiaries will receive approximately $19 extra dollars a month.
Keep in mind that due to this change the maximum amount of earnings subject to Social Security tax will be $117,000 instead of the $113,700 it has been. This is determined by wage statistics. This means statistically means millions of workers will end up paying more taxes in 2014 because of the increase in this maximum. According to an article written by Kelly Phillips in Forbes, social security benefits won’t keep pace with tax contributions in the year 2014. In regards to the increase of social security benefits it is actually lower than the past two years since it rose 1.7% in 2013 and a whopping 3.6% back in 2012. Since 1975 when when these cost of living adjustments were first implemented the average is about 4%. Many people have been complaining about the low percentage increases and say that the Consumer Price Index or CPI on which these increases are based aren’t completely reflective of some of the cost increases that seniors face.
Medical and housing, two big costs that seniors face have increased. Medical costs by 2.4% and housing costs of 2.3%. Keep in mind that if you are still working 6.2% of your earnings are paid towards social security. Along the same lines 1.45% of your earning are paid towards medicare tax. In order to compensate for the increase in cost of living, people tend to alter their spending to compensate. Let’s say for instance you are an avid coffee drinker but the price for coffee increases and the cost of tea remains the same. Perhaps you consider switching to tea in order to save money. So keep in mind these changes as we are about to begin a new year and plan accordingly.