For seniors who receive a monthly Social Security check, the amount will be 1.7% higher beginning in January, 2015, as the result of the cost of living adjustment (COLA). For those receiving the average monthly benefit of $1,302, that will be an increase of about $22 a month.
According to the Social Security Administration, this is the fourth straight year that the COLA has been below 2% for nearly 59 million retirees, disabled workers and their families. The COLA is calculated annually by comparing the cost of goods and services from the third quarter Consumer Price Index for Urban Wage Earners with the previous year's third quarter. In 2014, beneficiaries received a 1.5% increase.
Also beginning in January, the maximum amount of earnings subject to the Social Security tax will increase to $118,500 from $117,000 the previous year. Of the estimated 168 million workers who will pay Social Security taxes in 2015, only 10 million will pay higher taxes because of the increase.
On the bright side, the amount that Social Security beneficiaries pay for Medicare Part B, which covers doctor and outpatient hospital visits, will not change. The monthly premium and deductible for 2015 will remain $104.90 and $147 respectively. Medicare premiums will also remain unchanged for those with higher incomes, i.e. individuals earning more than $85,000 a year and couples with incomes above $170,000.