Bigger payments. The 1.7 percent cost-of-living adjustment is expected to result in the typical retiree getting about $22 more per month. This change will increase the average monthly benefit for retired workers in January 2015 from $1,306 before the cost-of-living adjustment to $1,328 after. The average benefit for retired couples who are both receiving benefits is projected to increase by $36 to $2,176 per month. Social Security payments are automatically adjusted each year to keep up with inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. Previous cost-of-living adjustments have ranged from zero in 2010 and 2011 to 14.3 percent in 1980. The 1.7 percent increase retirees will receive in January is similar to the 1.5 percent adjustment for 2014 and 1.7 percent increase in 2013.
Higher tax cap. Most workers pay 6.2 percent of every paycheck into the Social Security system until their earnings exceed the tax cap. The maximum taxable earnings will increase next year from $117,000 in 2014 to $118,500 in 2015. About 10 million of the 168 million workers who pay into Social Security are expected to face higher taxes as a result of this change. People who earn more than the taxable maximum do not pay Social Security taxes on that amount or have those earnings factored into their future Social Security payments.
Larger earnings limits. Social Security beneficiaries who are under age 66 can earn as much as $15,720 in 2015, before $1 in benefits will be withheld for every $2 earned above the limit. Retirees who will turn 66 in 2015 and have signed up for Social Security can earn up to $41,880 before every $3 earned above the limit will result in one benefit dollar being withheld. However, once a retiree turns age 66 there is no limit on earnings and Social Security payments are recalculated to give the retiree credit for the withheld benefits.