On Wednesday, October 30, 2013, the Social Security Administration announced that benefits will rise by 1.5% beginning with January payment. This represents a $22.50 monthly increase for a recipient receiving $1,500 per month. This increase will apply to about 63 million Americans receiving benefits.
The SSA also announced that the wage base will increase from $113,700 (2013) to $117,000 in 2014. This represents a 2.9% increase and as we have posted previously, the rate of these annual increases over the next few years is expected to be dramatically greater than any benefit increase. There is a strong chance that the wage base will be at least $200,000 within the next decade. This increase is expected to apply to about 10 million employees and self-employed workers such as farmers.
The Wage Base is the maximum amount that FICA contributions are owed on. For 2014, a worker who earns at least $117,000 will see 6.2% or 7,254 deducted out of their paycheck and the employer will match this amount and remit it to the government. This represents a total of $14,508 for those 10 million Americans up from the maximum $14,098.80 owed in 2013. For self-employed workers, they will contribute both the employee and employer portion.