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Social Security Income Increases in 2015

SSI Benefits Are Unmatched with Some Healthcare Increases 

Millions of American retirees can look forward to a modest increase in their bank accounts due to a 1.7% increase in Social Security Income (SSI) benefits beginning January 2015.

Social Security beneficiaries will begin to receive an average of about $22 more per monthly check based on the average retired worker’s earnings. In recent years SSI recipients saw cost-of-living-adjustment (COLA) increases of:

  •          1.5% increase in 2014
  •          1.7% increase in 2013
  •          3.6% increase in 2012

No COLA adjustments were made in 2010 or 2011.

The maximum amount of earnings subject to Social Security tax will also increase in 2015 to $118,500 from $117,000. The wage cap increase is based on an increase in average wages.

The bump in retired workers’ SSI checks is tied to a COLA determined by the average inflation in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).                                                                                                                                                   Photo Courtesy: Wikipedia Commons

“From an ideal math perspective, what you want is a calculation based on an index that matches retirees’ cost of living," says Polina Vlasenko, a senior researcher at the American Institute for Economic Research. “The CPI-W is constructed to measure spending patterns of urban wage earners, and it’s pretty clear that retired people spend differently than wage earners.”

While COLAs have driven SSI fluctuations since the 1972 Social Security Amendments, many retirees are calculating whether the 1.7% adjustment matches the increase of necessary expenses such as healthcare.

According to the Consumer Price Index for all Urban Consumers (CPI-U) report for October 2014, over a 12-month period, gas prices dropped 3.6% while there was an increase in medical care commodities by 2.9%, medical care services by 1.7%, food by 3%, shelter by 3%, energy services by 3.5% and utility gas services by 5.8%.

Medicare, which is excluded from the CPI-U medical care expenditure, is another expense to consider for the New Year. The Medicare Part A deductible will increase by $44 or nearly 4% for individuals with an annual adjusted gross income of less than $85,000 or $170,000 if married filing jointly. The average monthly Medicare Advantage premium will rise 9.5%. Medicare Part D plans vary and Part B premiums and deductibles will remain the same.

Federal retirees insured under a Federal Employees Health Benefits (FEHB) plan will see an average 3.8% increase in health care premiums in 2015. “Medical costs continue to outpace the COLA as it is calculated presently,” Joseph A. Beaudoin, President of the National Active and Retired Federal Employees Association, said in a statement. “We need a cost-of-living formula that doesn’t force these Americans to take one step forward, then two steps back.”

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