For seniors receiving Social Security benefits your check will be a little bigger starting in January. But don't go on a spending spree as it won't be THAT much bigger.
According to the Social Security Administration, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 63 million recipients will increase 1.5% in 2014. That will add about $19 to the average monthly benefit check, taking it to $1,294.00.
The cost-of-living adjustment (COLA) will begin for Social Security benefit recipients in January 2014. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2013.
The COLA is based on the percentage increase in the Consumer Price Index (CPI) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
No Medicare increase
Meanwhile, the government says there will be no increase for most people in Medicare's Part B premium next year. Most people paid the Part B premium of $104.90 each month this year and that will not change in 2014.
However, if your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you may pay more.
Giveth and taketh
But the news isn't all good.
Based on the COLA increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $117,000 from $113,700. Of the estimated 165 million workers who will pay Social Security taxes in 2014, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.
Part and parcel of all of this is the inflation report for September.
The government says higher energy prices contributed to an 0.2% increase in the CPI last month.
The cost of energy rose 0.8%, with gasoline up 0.8%, fuel oil posting an 0.9% increase, natural gas surging 1.8% and electricity rising 0.5%. Even with the September increase, energy prices are down 3.1% over the past 12 months, with gasoline showing a drop of 7.5%.
Food prices were unchanged in September after rising in each of the three previous months, thanks largely to an 0.9% decline in the cost of fruits and vegetables, and 0.2% dip in nonalcoholic beverage prices -- the third straight monthly decline. In contrast, cereals and bakery products were up 0.2% and prices for meats, poultry, fish, and eggs, and for dairy and related products increased 0.1%. percent.
The costs of all items excluding the volatile food and energy categories, rose 0.1% -- the same as in August. Contributors to the increase in this “core” rate of inflation included shelter and medical care, new vehicles, and airline fares. Prices for clothing and recreation declined.
The full September CPI report is available on the Labor Department website.