WASHINGTON (AP) — Social Security benefits for nearly 58 million people will increase by 1.5 percent next year, the government announced Wednesday.
The increase is among the smallest since automatic adjustments were adopted in 1975. It is small because consumer prices haven’t gone up much in the past year.
The annual cost-of-living adjustment, or COLA, is based on a government measure of inflation that was released Wednesday morning.
The COLA affects benefits for more than one-fifth of the country. In addition to Social Security payments, it affects benefits for millions of disabled veterans, federal retirees and people who get Supplemental Security Income, the disability program for the poor.
The amount of wages subject to Social Security taxes is also going up. Social Security is funded by a 12.4 percent tax on the first $113,700 in wages earned by a worker, with half paid by employers and the other half withheld from workers’ pay.
The wage threshold will increase to $117,000 next year, the Social Security Administration said. Wages above the threshold are not subject to Social Security taxes.
About 165 million workers pay Social Security taxes. About 10 million earn wages above the threshold, the agency said.
Social Security pays retired workers an average of $1,272 a month. A 1.5 percent raise comes to about $19.
“By providing protection against inflation, the COLA helps beneficiaries of all ages maintain their standard of living, keeping many from falling into poverty,” said AARP executive vice president Nancy LeaMond. “The COLA announced today is vital to millions, but at an average of just $19 per month, it will quickly be consumed by the rising costs of basic needs like food, utilities and health care.”
The COLA announcement had been scheduled for two weeks ago. It was delayed because the Bureau of Labor Statistics did not issue the inflation report for September during the partial government shutdown.
Since 1975, annual Social Security raises have averaged just over 4 percent. Next year will mark only the seventh time the COLA has been less than 2 percent, including several recent ones. This year’s increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low.