Social Security benefits to go up by 1.5 percent

WASHINGTON — Social Security benefits for nearly 58 million people will increase by 1.5 percent next year, the government announced Wednesday.

The increase is among the smallest since automatic adjustments were adopted in 1975. It is small because 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 morning.

The COLA affects benefits for more than one-fifth of the country. In addition to Social Security payments, it affects benefits for millions of disabled veterans, federal retirees and people who get Supplemental Security Income, the disability program for the poor.

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.

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

“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.”

The COLA announcement had been scheduled for two weeks ago. It was delayed because the Bureau of Labor Statistics did not issue the inflation report for September during the partial government shutdown.

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, including several recent ones. This year’s increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low.

In some years, part of COLA has been erased by an increase in Medicare Part B premiums, which are deducted automatically from Social Security payments. But Medicare announced Monday that Part B premiums, which cover doctor visits, will stay the same in 2014, at $104.90 a month for most seniors.

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 to 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.

Lower prices for gasoline are helping keep inflation low, said Polina Vlasenko, a research fellow at the American Institute for Economic Research.

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. Overall transportation costs have dropped by 2 percent in the past year, according to the Bureau of Labor Statistics.

Prices for food and beverages have gone up by 1.4 percent, while clothing costs have gone up by 0.7 percent.

Automatic COLAs were adopted 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.

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 government report. Housing costs went up 2.3 percent.

More in Local News

Agencies launch coordinated response to an opioid ‘emergency’

Health workers, law enforcement agencies and emergency managers are responding as they might to a disaster.

Jordan Evers distributes coffee Sunday afternoon during the annual community meal at Carl Gipson Senior Center in Everett on November 19, 2017. (Kevin Clark / The Herald)
Firefighters serve Thanksgiving meals at Carl Gipson center

The next two feasts at the senior center in Everett will be Thanksgiving Day and Dec. 3.

Hiker rescued on Boulder River trail after 15-foot fall

She was reported to have possible leg and rib fractures.

Alleged philanderer attacked with hammer near Everett

His girlfriend had accused him of cheating and allegedly called on another man to confront him.

Snohomish County Council passes a no-new-taxes budget

The spending plan still funds the hiring of five new sheriff’s deputies and a code enforcement officer.

Darrington School Board race might come down to a coin flip

With a one-vote difference, a single ballot in Skagit County remains to be counted.

Is the state Transportation Commission irrelevant?

A report says the citizen panel often is ignored, and its duties overlap with the Transportation Department.

Pair charged with first-degree robbery in marijuana theft

A man was shot in the head during a holdup that was supposed to net about an ounce of pot.

Most Read