Social Security Announces 1.7 Percent Benefit Increase for 2015

Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 64 million Americans will increase 1.7 percent in 2015, the Social Security Administration announced today. 

The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 58 million Social Security beneficiaries receive in January 2015. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2014. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics. 

Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $118,500 from $117,000. Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum.  

Information about Medicare changes for 2015 is available at 

The Social Security Act provides for how the COLA is calculated. To read more, please visit 

A fact sheet showing the effect of COLA related automatic changes for 2015 is here.

Fast Facts about Social Security

Did you know that 65% of aged beneficiaries received at least half of their income from Social Security in 2012 or that 55% of adult Social Security beneficiaries in 2013 were women?

Fast Facts & Figures About Social Security, 2014 is available online. This annual chartbook highlights data on the most important aspects of the Social Security and Supplemental Security Income programs—the people they serve and the benefits they provide.

From the Preface: 

Fast Facts & Figures answers the most frequently asked questions about the programs administered by the Social Security Administration (SSA). It highlights basic program data for the Social Security (retirement, survivors, and disability) and Supplemental Security Income programs.

The tables and charts illustrate the range of program beneficiaries, from the country’s oldest to its youngest citizens. In all, about 63.2 million people receive some type of benefit or assistance.  

I thought the sections about beneficiary age and sex interesting. Perhaps you will too.

Receiving Social Security? Keep your earnings estimate current.

Q: I work part-time while receiving Social Security retirement and will earn less this year than originally estimated. Should I change my estimate with Social Security?

A: Yes, if you expect to earn over annual earnings test amounts, update your 2014 earnings estimate with Social Security now if your original estimate has changed. You can update your estimated earnings anytime during the year.

Your annual gross wage or net self-employment earnings can reduce Social Security benefits for the year until you reach full retirement age (FRA). Earnings test amounts for 2014 are at and in How Work Affects Your Benefits (SSA publication 05-10069). Pensions, investment and other non-employment income are not included for earnings test purposes. Earnings test amounts for 2015 are not yet available.

If you have not yet reached full retirement age, keeping your estimated calendar year earnings current with Social Security is important, especially if your original estimate was below the earnings test amount and you will actually earn over it.

If you expect to earn more than originally planned, with earnings to be over the 2014 earnings test amount for your age, updating your estimate now can prevent or reduce the chance of your being incorrectly paid and needing to refund money to Social Security.

If your current estimate is lower than originally expected, updating it now can release any withheld benefits to you faster. Revise your earnings estimate up or down as needed during the year. Report your actual earnings at the end of the year if you earn over the annual limit for your age.

People receiving Social Security because they have a disability do not have an earnings test and should contact Social Security to learn about available incentives if returning to work. 

Immediately is the best time to report changes to Social Security, including changes to your address, earnings or marital status.  Read “What You Need To Know When You Get Retirement or Survivors Benefits” (SSA publication 05-10077).

Change your estimate or report other changes by calling Social Security nationally at 1-800-772-1213 (TTY-1-800-325-0778) from 7:00am – 7:00pm, or contact your local office.




Mid-year retirement and the annual earnings test

Q: I have been working all year and will retire soon. Does Social Security start counting my wages with the day I start retirement or from the beginning of the year? Can I start Social Security retirement now or must I wait until 2015 due to my earnings? 

A: If you are at least age 62 and meet all requirements, start Social Security retirement when you want, whether this year after you retire, in 2015, or some other time.  

Your question refers to the annual retirement earnings test. Earnings for the retirement test include your calendar year gross wages and net income from self-employment. Other income is not included for the earnings test. 

People retire all during the year. Since those retiring mid-year might have already earned over earnings test levels for the year, there is a special one-time rule, usually used during the first year of retirement, that lets people receive Social Security retirement benefits based on monthly earnings. Using this one-time exception, you should be able to start SSA retirement when you retire despite your total earnings for this year.

Based on this one-time rule, a person retiring in 2014, at least age 62 but younger than full retirement age the entire year, can receive Social Security retirement for months that gross wages do not exceed $1,290 even though overall calendar year earnings are far above retirement test amounts. Slightly different rules apply for self-employment.   

Earnings test amounts for 2015 are not yet known, but 2014 information is here 

What SSA widow / widower benefits are not age based?

My preceding post was about Social Security survivors benefits to a widow or widower based on age, payable once the eligible person is at least age 60.

This leads to the question of what widow or widower Social Security survivors benefits are not based on age. There are two, each with its own requirements.

At any age, Social Security survivor benefits might be payable to a widow or widower if a child of the deceased also receives suvivors benefits on that record. The surviving parent must be taking care of the child and the child must be younger than age 16 or disabled.

Since taking care of the eligible child is the reason for payment of benefits, age of the surviving parent does not change the amount payable to the widow or widower. However, their individual benefits for a year can be reduced by employment earnings due to the annual earnings test, just as for a person receiving Social Security retirement. Amounts paid to the widow(er) can potentially lower amounts payable to eligible children. For these reasons, people otherwise eligible for this type of benefit sometimes choose not to receive it, especially if working full-time.

The other is based on disability, with an age requirement. Called disabled widow(er) benefits, these can be paid if the person is at least age 50, but not age 60, and determined to be disabled within a certain period of time. Exceptions exist but usually the disability must have started within seven years of the spouses death.

Not being discussed today, divorced spouses of a worker who dies can receive the same types of survivors benefits as a widow or widower, provided that the marriage lasted 10 years or more and other requirements are met.

Read the booklet “Survivors Benefits” (SSA publication 05-10084) for general information about Social Security survivors benefits.


When do I get credit for my 2013 earnings?

Q: I retired effective January 2014, so my current Social Security payment only reflects earnings through 2012. When will my retirement amount include 2013 wages? What do I need to do to make that happen?  

A: Earnings for 2013 are automatically reviewed for possible increase to your retirement benefits when posted to your work record, approximately by October 2014. You do not need to do anything for this to happen. The automatic review includes employment from wages and self-employment.  

Employers pay estimated taxes to IRS based on wages paid during the year but specific information of how much individual employees earned during a year are only sent to the Social Security Administration with annual W-2’s. Your employer reports earnings to Social Security at about the same time you receive your W-2 form. The employer report is a copy of the W-2.  

Employers of all sizes can register to report W-2 information electronically with Social Security Business Services Online. Incentives exist to encourage electronic W-2 reporting but many still are received by paper, requiring additional handling and processing time.  

W-2 processing for a year is usually completed during the fall of the following year, approximately October. Social Security receives more that 250 million wage reports annually. These are processed by employer report, not by individual employee. If you worked for more than one employer during the year, your total earnings will not be posted to your personal earnings record all at one time. Earnings from each employer will be added to your record when that employer’s report is processed.  

Your 2013 earnings will be automatically reviewed for possible increase to your retirement benefits when posted to your work record. While this review is automatic, it does not mean that benefit amounts will increase a significant amount or even at all. Retirement benefits are based on your best 35 years of employment, with the actual earnings amounts adjusted (indexed) to account for changes in average wages over the years. New earnings would have to replace earnings already used to increase your retirement amount. If 2013 earnings increase benefits, the increase is retroactive to the start of 2014.   

Since Social Security posts W-2 information all during the year, this automatic review might be sooner, especially if the employer reports W-2 data electronically with Social Security Business Services Online, but final reviews are completed when all W-2’s for the preceding year are processed in the fall. 

This review is done automatically every year that new earnings are posted to your work record. You do not need to take any action for this to happen.  See page 9 of “How Work Affects Your Benefits” at

Whether or not receiving monthly benefits, you can check your personal Social Security earnings record by creating your my Social Securityaccount and looking at your SSA Statement. Earnings on the Statement are updated as described above, with earnings for a year posted during the fall of the next.

How many people work while receiving Social Security?

Q: How many people receiving Social Security benefits are also working?

A: The publication Earnings and Employment Data for Workers Covered Under Social Security and Medicare, by State and County, 2011 mentioned earlier this week does not provide information based on whether the worker received Social Security or not, so a specific answer is not readily available. 

Through SSA retirement, survivors and disability programs, plus family benefits in each of those, payments go to people of all ages, many of whom might be working.

 As reported in the Income of the Aged Chartbook, 2012, based on Census Bureau household survey data, in 2012 approximately 28 percent of those aged 65 or older had employment earnings. Not all of those surveyed were receiving Social Security benefits but nearly 90 percent were. 

In the households surveyed, employment greatly varied based on age. Of those in the age 65-69 range, 49.7 percent had earnings. By age 70-74 this dropped to 30.6 percent , then to 19.8 percent for people aged 75-79 and ending at 8.5 percent for those age 80 or older. 

Social Security provides the largest share of aggregate income for units aged 65 or older. Aggregate income for the aged population comes largely from four sources. Social Security accounts for 35.3%, earnings for 33.9%, pensions for 17.1%, and asset income for 10.5%. Only 3.0% comes from other sources.

The Income of the Aged Chartbook, 2012, is on the SSA website at

If you work and receive Social Security benefits, other than because of your own disability, the annual retirement test applies if you are younger than full retirement age (FRA). FRA is different for retirement compared to survivors benefits.

 If receiving SSA benefits due to your own disability, report the work to Social Security and ask how it might affect your benefits. Disability work incentives exist to help you return to work.

National and State Earnings & Employment Data, 2011

Usually my posts are directly related to Social Security benefits. This one is a bit different and, I think, will especially interest readers involved with local employment data.

In addition to helping fund current Social Security benefits, your earnings are used to compute your future retirement amount.

This month the SSA’s Office of Retirement and Disability Policy released the following on its website:

Earnings and Employment Data for Workers Covered Under Social Security and Medicare, by State and County, 2011
This annual statistical report presents employment and earnings data by sex and age for people in employment covered under Social Security and Medicare. The tables include data on workers in the 50 states, District of Columbia, Puerto Rico, U.S. Virgin Islands, American Samoa, and Guam.

For nation and state, to the individual county level, this publication contains tables showing employment by wages or self-employment, by age groups and by sex. 

Data is arranged by the number of people with Social Security (OASDI) taxable earnings and by the number of people with Medicare Part A (Health Insurance) taxable earnings

For example, several of the tables available are:

Table 1. Number of persons with Social Security (OASDI) taxable earnings, amount taxable, and contributions, by state or other area, sex, and type of earnings, 2011

Table 2. Number of persons with Social Security (OASDI) taxable earnings, by state or other area, sex, and age, 2011

Table 3. Number of persons with Social Security (OASDI) taxable earnings, amount taxable, and contributions, by county, sex, and type of earnings, 2011.

 From the publication:  

  •  In 2011, 158.6 million workers had earnings taxable under the Social Security program. About 140.9 million had only wages, 10.4 million had only self-employment income, and 7.3 million had both.
  • Social Security taxable earnings totaled $5.487 trillion, which includes earnings up to the taxable maximum of $106,800.
  • Social Security taxes totaled about 680 billion.

 The direct link to this publication is

Changing your mind after retirement

Q: Can a person stop Social Security retirement benefits if they retire early but then change their mind and go back to work full-time?

A: Unexpected changes may occur after starting Social Security retirement. Stopping payment of retirement benefits can be done, with each option having positive and negative points to consider.

You can totally withdraw an application if within 12 months of starting benefits, which includes repaying all SSA benefits you and anyone else received through the application.

Later, a new application would be required to restart benefits and your retirement amount would be computed based on it. However, you might miss out on benefits if earning less than anticipated or due to changes in annual retirement earnings limits from year to year. Retirement test information for 2014 is in the Social Security retirement planner at The earnings test includes only your personal gross wages or net income from self-employment.

Another option if returning to full-time work, especially if you have received benefits for over a year, is to update your estimated earnings amount for the calendar year.

Based on your updated earnings estimate and the annual retirement test, some or none SSA retirement might be payable to you for the year once your earnings are considered. Upon retiring or reducing work again, a new application would not be required to start benefits. To restart benefits you would need to reduce your estimated earnings amount.

However, if restarting benefits when still younger than full retirement age (FRA), amounts would resume at the original reduced amount. Amounts are recalculated effective with FRA to increase benefits for months that you worked and did not receive a retirement benefit.

Earnings test limits end when you reach full retirement age but you can still suspend the receipt of benefits past that age.

Whether or not you receive SSA benefits during the year, new earnings potentially could increase your retirement amount. Benefit amounts are automatically reviewed when new earnings are posted to your work record.


What are the sources of retirement income?

Overall, what are the sources of retirement income?

The recently released Social Security publication, Income of the Aged Chartbook, 2012, provides this information in charts and tables that are easy to understand. Charts focus on the receipt and shares of income from Social Security, pensions, assets, earnings, and public assistance, effectively illustrating the Social Security program’s pivotal role in the economic security of the aged.

From the Income Sources portion of report:

 “Social Security is the most common source of income for units aged 65 or older. Nearly 9 out of 10 aged units receive Social Security benefits. Asset income is the next most common source of income, received by more than half of the aged. Two-fifths receive retirement benefits other than Social Security, and more than one-quarter have earnings. Public assistance and veterans’ benefits are each received by less than 5%. Noncash benefits, including SNAP benefits and housing and energy assistance, are received by almost 12%.”

 “Social Security provides at least half of total income for a majority of beneficiary aged units. In 2012, 86.8% of married couples and 85.6% of nonmarried persons aged 65 or older received Social Security benefits. Social Security was the major source of income (providing at least 50% of total income) for 52.3% of aged beneficiary couples and 73.8% of aged nonmarried beneficiaries. It was 90% or more of income for 21.6% of aged beneficiary couples and 46.8% of aged nonmarried beneficiaries. Total income excludes withdrawals from savings and lump-sum payments from IRAs or 401(k)s; it also excludes in-kind support, such as SNAP benefits and housing and energy assistance.”

Note: the report defines a unit as “The unit of analysis here, with the exception of the measures of poverty and family income of persons, is the aged unit, which is a married couple living together or a person who does not live with a spouse.”

From the Aggregate Income portion of the report:

“Social Security provides the largest share of aggregate income for units aged 65 or older. Aggregate income for the aged population comes largely from four sources. Social Security accounts for 35.3%, earnings for 33.9%, pensions for 17.1%, and asset income for 10.5%. Only 3.0% comes from other sources.”

The Income of the Aged Chartbook, 2012 is at