By Patricia L Johnson
Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 64 million Americans will increase 1.7 percent for December 2014, according to the Social Security Administration announcement of October 22, 2014. The majority of beneficiaries will see this increase in benefits on payments they receive in January 2015. SSI recipients will receive the increase on their December 2014 payments.
This yearly Cost of Living Adjustment (COLA) is tied directly to the Consumer Price Index (CPI) as determined by the Department of Labor’s Bureau of Labor Statistics (BLS). P.L. 92-336 established automatic increases to Social Security and SSI benefits each year based on the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This calculation is based on the average CPI-W for the third calendar quarter of the last year a COLA was determined compared to the third quarter of the current year. The percentage increase (if at least 0.1 percent) then becomes the COLA increase that will become effective December of the current year. Prior to the signing of P.L. 92-336 making cost of living adjustments automatic, cost of living adjustment allowances were only made when Congress approved an increase.
The consumer price indexes for the six months in question follows. As you can see the average for the third quarter of 2013 is 230.327, while the average for the third quarter of 2014 is 234.242. The difference between the two averages is 3.915 [234.242-230.327]. If you take the 3.915 difference and divide it by the average for the 3rd quarter of 2014, which is 230.327 you come up with 0.016997 multiplied by 100 = 1.6997 rounded becomes 1.7 percent.
Monthly Consumer Price Index data for Urban Wage Earners and Clerical Workers (CPI-W) may be located on the Social Security Administration website.
In addition to the COLA increase additional changes for 2015 follow:
TAX RATE – Employee and Self-Employed tax rates for 2015 remain the same as they were for 2014. 7.65% for an employee and twice that amount for the Self-Employed – 15.30%. The figures are based on 6.20% for OASDI (Social Security) and 1.45% for HI (Medicare) on all earnings. Individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly) will pay an additional 0.9 percent in Medicare taxes which are not included in the rates shown above.
MAXIMUM TAXABLE EARNINGS – Maximum taxable earnings for OASDI will be $118,500, up $1,500.00 from 2014. There is no limit on Medicare taxes, the 1.45% will be paid on all earnings.
QUARTER OF COVERAGE – In 2015 it will take $1,220 per quarter of coverage, up $20 from 2014.
A review of the Social Security website will provide answers to any questions you may have on any of the 2015 changes.
© 2014 Patricia L Johnson
Latest posts by Patricia Johnson (see all)
- The History Behind Department 56 - November 13, 2014
- 1.7% COLA Increase for Social Security Beneficiaries for 2015 - October 22, 2014
- “Anchor’s Aweigh”– Happy Birthday United States Navy - October 6, 2014