1.7% COLA Increase for Social Security Beneficiaries for 2015

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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.

CPI-W

 

 

 

 

 

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

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6 Responses to 1.7% COLA Increase for Social Security Beneficiaries for 2015

  1. Hmmmm…. I’m not sure I’m getting the correlation between the numbers Richard. When you started working in 1957 you were earning $2.74/hour which was almost 3 times the minimum wage of $1.00. Your .14/hour increase brought it up to $6,000 a year, which was $2.88/hour.

    For someone to start at $40,000 now, they would have to have a starting wage of $19.23, which is a far cry from the $15,280.00 they would be earning today under the minimum wage of $7.25 in Ohio. The minimum wage for Illinois is $8.25 so that brings it up to $17,160.00, but let’s face it.

    There’s virtually no way an individual can live on that amount, much less an entire family.

    The people making the laws just don’t get it because they’ve never had to stretch a dollar.

    Have a good day,

    P.

    • I was using simpler arithmetic. The minimum wage in 1957 was $1 an hour when I graduated in June of that year. I started @ $5700/yr. The minimum wage now is
      $7.25 an hour. Multipy $5700 X 7.25 and the answer is $41,295.
      Q.E.D.

      • Agreed, the minimum wage was $1.00/hour in 1957, but the $5,700 you were earning was not minimum wage, therefore it doesn’t seem reasonable to say since you were earning $5,700 when the minimum was $1.00, people should now be earning $41,295 at a minimum of $7.25. There’s no correlation between the two numbers because of the fact you were earning 2.74 times the minimum, not the minimum.

        You can’t just multiply $5700 x $7.25 and say it’s correct because you’re mixing apples and antelopes.

  2. In 1957, I graduated from Syracuse University and went to work for $5700. In December, I got
    a raise of $300–$6000 a year. The minimum wage in 1957 was $1 an hour. The minimum wage
    now is $7.25 an hour. Are people who graduated in 2014 starting at $40,000 a year? I don’t
    know of any.

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