New York Estate Planning & Elder Law Blog
Millions of elderly and disabled Americans receiving Social Security benefits will see a small increase in their government payments next year. The Social Security Administration announced earlier this month that it will be adding a 1.7% cost of living increase for the nearly 58 million Americans receiving federal retirement or disability benefits.
2015 Increased Social Security Benefits
On average, this increase would add $22 per month for retirees, and this makes for the third straight annual increase in Social Security benefits in as many years. The cost of living increases have all been between 1.5% and 1.7%, and this year’s increase matches the 1.7% rise in consumer prices in September. This is according to the data released by the U.S. Labor Department last week. According to the American Federation of Government Employees, more than 2.5 million federal government retirees will also receive a 1.7% cost of living increase.
The monthly maximum federal amounts for 2015 are now increased to $733 for an individual, $1,100 for an individual with a spouse, and $367 for an essential person. In general, monthly amounts for the next year are determined by increasing the unrounded annual amounts for the current year by the cost of living increase effective for January of the next year. The new unrounded amounts are then each divided by twelve and the resulting amounts are rounded down to the next lower multiple of one dollar.
According to the Social Security Administration, as a result of this year’s cost of living adjustment, the average retired worker’s Social Security $22 increased benefit will raise the average benefits to $1,328 per month. This cost of living raise will be the Administration’s fourth in a row. Because of a lack of inflation, retirees did not receive increases in 2009 and 2010.
For Social Security recipients who are less than full retirement age and have earnings from work, the annual maximum amount of exempt earnings will rise next year by $240 to $15,720. For every two dollars earned above the maximum, one dollar in Social Security benefits will be withheld. There is no limit on earnings beginning the month a person attains full retirement age.
The Need for the Increase
More than 58 million Social Security retirees, dependents, and survivors will receive the cost of living adjustment beginning with benefits payable in January, while more than eight million Supplemental Security Income recipients will begin receiving it on Dec. 31 of this year. Some beneficiaries receive payments under both programs.
The small increase for cost of living nonetheless limits the ability of beneficiaries, around twenty percent of the U.S. population, to step up spending. According to the AARP, the majority of the people ages 65 and older rely on Social Security benefits for at least fifty percent of their retirement income.
Other Social Security Changes
Some other changes that take place in January each year are also based upon the increase in average wages. Based on the increase, the maximum amount of income subject to Social Security tax also rises from $117,000 to $118,500. Of the estimated 168 million workers who pay Social Security taxes, around ten million people will be affected by this change.