Social Security Increases Based on CPI Change
Since there was a 1.5% increase in the Consumer Price Index (CPI-W) from the third quarter of 2012 to the third quarter of 2013, the Social Security Administration announced a 1.5% cost-of-living adjustment for 2014. This compares to a 1.7% increase in 2013. The wage base increase is based on an increase in the national average wage index. Wages are taxed at 6.2%, so the maximum tax to be paid by each employee at that rate would be $7,254.00. About 6% of workers who pay Social Security Tax are expected to reach the maximum in 2014.
Retirement Earnings Test Exempt Amounts Increase for 2014
For workers under full retirement age who are receiving Social Security benefits, $1 in benefits is withheld for every $2 above the Retirement Earnings Test Exempt Amount of $15,120 per year or $1,260 per month in 2013. This will increase to $15,480 per year or $1,290 per month for 2014. The year an individual reaches full retirement age, $1 in benefits is withheld for every $3 above the Retirement Earnings Test Exempt Amount of $40,080 per year or $3,340 per month in 2013. This will increase to $41,400 per year or $3,450 per month for 2014. The month an individual reaches full retirement age there is no limit on earnings.
Quarter of Coverage Amounts Increases to $1,160
Also increasing for 2014 is that amount needed to earn a Social Security credit, formerly known as a quarter of coverage. In 2013, a credit is earned for every $1,160 of earnings, up to a maximum of four credits. That amount will increase to $1,200 for 2014.
Social Security Monthly Benefits to Increase in January 2014
The maximum benefit for a worker retiring at full retirement age is also increasing from $2,533 to $2,642. See the table below for other changes in Social Security benefits for 2014.
2014 Social Security Benefits
|Worker Retiring at Full Retirement Age||$2,533 per month||$2,642 per month|
|SSI Federal Payment Standard:|
|Individual||$710 per month||$721 per month|
|Couple||$1,066 per month||$1,082 per month|
|SSI Resources Limit:|
|SSI Student Exclusion:|
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