If you receive Social Security benefits of any kind, you are probably familiar with COLA. It stands for Cost of Living Adjustment, and its purpose is to ensure your benefits keep pace with inflation.
Social Security rolls out new COLA information every year, and the changes that will take effect in 2015 were recently released. For the more than 63 million people receiving Social Security benefits and SSI, the headline is that there will be a 1.7% cost-of-living increase in your benefit checks. It is not huge, but it is a bigger increase than last year, where recipients saw only a 1.5% bump.
What does this mean in real numbers? That someone who has been receiving $600 per month can expect to start getting $610.20 in the New Year. Those who get SSI will notice this increase on December 31, 2014, but Social Security recipients will have to wait a few more days into January of 2015.
Other important COLA changes to note include slight increases across the board:
- If you are under full retirement age, you can now earn $15,720 per year (or $1,310 per month) before your income will start to cause your monthly retirement benefits to be reduced. The 2015 rate is that for every $2 you earn above the limit, $1 in benefits will be taken away.
- If you reach full retirement age in 2015, you can earn up to $41,880 for the year, or $3,490 per month, before your benefits will be reduced. The 2015 rate is that for every $3 you earn above this limit, $1 in benefits will be taken away.
- The amount that Social Security considers to be “Substantial Gainful Activity” (SGA), which roughly means working, has increased from $1,070 per month to $1,090 per month (or $1,820 per month if you are blind). The threshold amount for a Trial Work Period has also been increased from $770 to $780.
- The maximum Social Security benefit for a worker retiring at full retirement age has increased by $21, to $2,663 per month.
- The SSI Federal Payment Standard will increase to $733 for an individual and $1,100 for a couple.
- Exclusions for students receiving SSI have increased to $1,780 per month and $7,180 per year.
All of these increases were determined using the Consumer Price Index (CPI-W) from the third quarter of last year. Essentially, COLA increased because there was a price increase in consumer goods.
There is a lot of debate about whether or not the CPI-W is the appropriate tool to determine COLA. If you have an opinion on the matter, do some research and reach out to Social Security to ensure your voice is heard. Speaking out is the best way we can strengthen and improve these vital social programs.
Have more Social Security questions or concerns about a Social Security claim? Contact my office immediately so I can give you the help you need. Remember, we provide a free claim evaluation. Don’t miss out on needed benefits because you are not sure whether or not you qualify.