If you are a Social Security recipient, your monthly check will rise by 1.7 percent in 2015. This is slightly more than the 1.5 percent increase in 2014 but less than half the 3.6 percent adjustment in 2013.
The Social Security Administration reports that the average monthly benefit for more than 58 million recipients will be $1,328 per month or $15,936 per year. This is an increase of $24 per month from last year.
But for many seniors, the rise in benefits will not cover increases in the prices of essential items such as utility and grocery bills. In addition, housing costs are rising faster than the rate of inflation, posing hardships for senior who do not own their homes.
Past studies by the Social Security Administration found that Social Security payments are the primary source of income for 64 percent of recipients. One-third of them report that Social Security accounts for 90 percent of their income.
Moreover, according to the U.S. Census Bureau, 10 percent of individuals 65 years of age and over currently live in poverty. The Census Bureau notes that women and minorities are most likely to struggle to escape poverty.
Cost-of-living adjustments (COLAs) are automatically set by a formula enacted by Congress that requires the Social Security Administration to determine annual payments based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Changes in the CPI-W for the months of July, August, and September are compared with the same period in the previous year. Social Security recipients receive increases that match the change in the CPI-W, beginning with the checks for January.
The adjustment in benefits brings with it a rise in the maximum amount of earnings subject to payroll taxes. The ceiling will rise to $118,500 from the current $117,000.
While Medicare Part B premiums are usually linked to changes in Social Security payments, premiums will not rise in 2015. For most retirees, premiums will remain at $104.90 per month. And the amount charged for higher income individuals —more than $85,000 for individual tax filers and $170,000 for those filing jointly — will also be unchanged.
That Medicare premiums will not increase is good news. In recent years, premium increases accounted for about one-fourth of a typical retiree’s COLA.
Wayne Curtis, former superintendent of Alabama banks, is a retired Troy University business school dean. Email him at firstname.lastname@example.org.