The Social Security Administration just announced benefit increases effective in 2014. Current retirees will receive a cost-of-living increase, beginning in January 2014, of 1.5%, reflecting the increase in CPI-W between the third quarter of 2012 and the third quarter of 2013.
In addition, the maximum amount of earnings subject to Social Security tax will increase in 2014 from $113,700 to $117,000, based on a 3.1% increase in the ‘national average wage’ during 2012.
These changes will affect benefits for currently retired individuals, as well as those contemplating retirement. Employers who sponsor retirement plans that are ‘coordinated’ with Social Security in some fashion will also see an impact on benefits earned and payable under such plans.
IRS announcement anticipated
The release of September CPI figures by the Bureau of Labor Statistics also provides information needed to determine relevant 2014 thresholds and limits for retirement plans. Between the third quarter of 2012 and the third quarter of 2013, CPI-U increased 1.55%. Ahead of the official release by IRS, we have summarized the 2014 limits for various purposes below, along with values for 2012 and 2013.