If you are receiving Social Security Benefits now, expect to receive them next year or are paying into Social Security, several changes have just been announced by the Social Security Administration for 2015.
- Cost of Living increase of 7 %
- Some groups of workers who do not have online accounts with Social Security will begin receiving benefit statements in the mail
- Higher tax caps
- Larger earnings limits
- Maximum Benefit Increases
Below is more detailed information of all of the changes for 2015:
Bigger payments. The 1.7 percent cost-of-living adjustment is expected to result in the typical retiree getting about $22 more per month. This change will increase the average monthly benefit for retired workers in January 2015 from $1,306 before the cost-of-living adjustment to $1,328 after. The average benefit for retired couples who are both receiving benefits is projected to increase by $36 to $2,176 per month.
As many of you know, Social Security payments have a formula that automatically adjusts for most years when inflation is greater than a certain amount so as to keep up with inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. Previous cost-of-living adjustments have ranged from zero in 2010 and 2011 to 14.3 percent in 1980. The 1.7 percent increase retirees will receive in January is the same as the 2013 increase of 1.7% and larger than the 1.5% adjustment for 2014.
Higher tax cap. Most workers pay 6.2% of each paycheck into the Social Security system until their earnings exceed the tax cap. The maximum taxable earnings will increase next year from the current 2014 cap of $117,000 to $118,500 in 2015. Approximately 10 million of the 168 million workers who pay into Social Security are expected to face higher taxes as a result of this change. This group represents the top 6% of all workers. People who earn more than the taxable maximum $117,000 in 2014 and $118,500 in 2015 do not pay Social Security taxes on the excess over that amount or have those extra earnings factored into their future Social Security payments.
Larger earnings limits. Social Security beneficiaries who are under age 66 can earn as much as $15,720 in 2015, before $1 in benefits will be withheld for every $2 earned above the limit. Retirees who will reach 66 in 2015 and have signed up for Social Security can earn up to $41,880 before every $3 earned above the limit will result in one benefit dollar being withheld. However, once a retiree turns age 66 there is no limit on earnings and Social Security payments are recalculated to give the retiree credit for the withheld benefits.
Your statement might be in the mail. If you will turn age 25, 30, 35, 40, 45, 50, 55 or 60 next year and don’t have a Social Security online account, you can expect to receive a paper Social Security statement that lists your earnings history, taxes paid and expected benefit about 3 months before your birthday. And after age 60 workers will receive a statement annually. The SSA expects to send nearly 48 million Social Security statements each year. These mailings, which were sent annually to all workers age 25 and older between 1999 and 2011, were suspended in April 2011 to save money. Statements are also available online at any time via socialsecurity.gov/myaccount. Currently, 14 million people have created personalized accounts using this service. It is the lack of use by recipients and those about to retire that has caused the Social Security Administration to bow to the reality that this age group requires paper contact.
The maximum benefit increases. The maximum possible Social Security Payment for a worker who signs up at full retirement age will be $2,663 per month in 2015, up $21 from $2,642 in 2014.
We hope you find this information useful.
