The amount of monthly Social Security benefit checks will increase by 1.5 percent in 2014. The annual cost-of-living adjustment is expected to add $19 to the average Social Security check for retired workers, for an average monthly benefit of $1,294. The benefit for couples who both receive benefits is expected to climb by an average of $31, yielding an average monthly benefit of $2,111.
The cost-of-living adjustment happens every year and is based on the Consumer Price Index, the government’s measure of inflation. This increase is one of the lowest since automatic cost-of-living changes started in 1975. The basis for the small increase is the fact that consumer prices did not rise much overall in the past year. For example, the price of gasoline actually dropped. However, many essential goods and services, such as the cost of housing and medical costs, rose by more than 1.5 percent.
The cap for Social Security taxes will also increase in 2014. Most workers will pay 6.2 percent of their income into the system, until their earnings reach $117,000, up from $113,700 in 2013. The change will affect about 6 percent of workers.
Also in 2014, retirees below age 66 may earn up to $15,480 before some or all of their Social Security benefits are temporarily withheld, up $360 from 2013. Beneficiaries who earn more than that will have $1 withheld for every $2 they earn over the limit. People who will turn 66 in 2014 may earn up to $41,400, after which $1 is withheld for every $3 they earn. At age 66 or older, there is no earnings limit.
Finally, the maximum possible benefit a retiree can claim increases to $2,642 in 2014, up from $2,533 in 2013.