Social Security Benefits to Increase in 2014

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The Social Security Administration (SSA) announced on Wednesday that there will be a 1.5% cost of living adjustment for social security benefits starting with the December 2013 benefits, payable in January 2014. The purpose of the cost of living adjustment (also referred to as COLA) is to keep Social Security and Supplemental Security Income (SSI) benefits in line with inflation. Each year the increase is based on the Consumer Price Index. The increase for 2014 is slightly below the increase of 1.7% for 2013. Here is a look back at the last 5 years:

2010 - No change

2011 - No change

2012 - 3.6% increase

2013 - 1.7% increase

2014 - 1.5% increase

According to the SSA, the increase is "approximately" equal to the product of the COLA and an individual's benefit amount, but the exact compuation is not so simple. If you are so inclined to read the entire calculation, you can do so on the SSA website.