Social Security effects most of the people in the United States. Whether you are paying into Social Security or collecting from it, you should stay involved, talk to people such as Todd East Attorney at Law, and understand any changes that the government makes to Social Security. Next month it will be 2015 and a handful of changes will be made to Social Security. Here are 5 changes coming in 2015 that you should be aware of.
1. Cost of living benefit increase
Raising benefits are always a perk. If you are collecting Social Security benefits, you will see a 1.7% increase in your payments due to a cost of living adjustment. If you are currently receiving retirement benefits of $1,306 per month, your new payment will be $1,328. Depending on the type of benefits you are receiving, the average payments range from an $11 increase to a $45 increase.
The cost of living adjustment has taken effect as of December 2014. This means that you will see an increase on your January 2015 payment.
2. Maximum benefit increase
In 2014, the maximum benefit amount for retired workers was $2,642. As of January, the amount is going up to $2,663. Of course, there are exceptions to every rule. For those who wait to retire, delayed-retirement credits are still available. The delayed-retirement credits can add an extra 8% to your maximum benefit amount. Therefore, if you have full delayed-retirement credits, you can expect to receive $2876.04.
3. Maximum wage limit increase
When collecting Social Security at full retirement age, you are still allowed to work and collect benefits. However, the Social Security Administrations puts limits on how much you can collect or else they will reduce your benefits. Your benefits are not reduced dollar for dollar either. They are reduced $2 for every $1 you earn over the limit.
The wage limit in 2014 was $15,480 per year. In 2015, the new limit is $15,720; giving retired workers $240 of wiggle room that they didn't previously have. If you do have your benefits reduced, you don't lose them forever. It actually adds delayed-retirement credits to your Social Security benefits. If you decide to stop working all together, your monthly amount will be higher in the future.
4. Coverage credit earning increase
In order to collect Social Security after you retire, you have to have 40 coverage credits. The amount of money that your earn determines how many coverage credits you receive. This doesn't mean that wealthy people get to retire quickly, because you can only earn up to four coverage credits in a year.
In 2014, you had to earn $1,200 for one credit. Beginning in 2015, you have to earn $1,220 for a credit. It's not something that most people have to worry about since you will still receive full credits as long as you make more than $4,880 in a year.
5. Raise in Social Security tax payments
Social Security still has a tax rate of 6.2% so why will 10 million people see more of their paychecks go to Social Security? Luckily, only higher income workers will become affected by this. The tax cap for earnings paid into Social Security this last year was $117,000. Since average wages are rising around the United States, the new tax cap $118,500. This means that the first $118,500 that a worker earns throughout the year is taxed for Social Security payments. If you earn under $117,000, you won't see any difference.
Obviously, the Social Security changes for 2015 are better news for those who are collecting benefits than those you are still paying into them. However, to receive higher benefits, higher funding is important. The increase in benefits will be a help to everyone who is on a fixed income collecting Social Security.