Social Security Announces 1.5% Increase in Benefits
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.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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