The Social Security Administration (SSA) announced today that the 2014 cost-of-living adjustment (COLA) will be 1.5 percent, smack in the middle of the range that we estimated yesterday.
The taxable maximum — that is, the maximum earnings on which workers and their employers will pay Social Security taxes — will be $117,000 in 2014. The taxable maximum is indexed to growth in average wages, which is computed based on over 150 million W-2 reports. Next year’s $117,000 ceiling is slightly higher than we expected and indicates that growth in average wages in 2012 was a bit greater than the SSA actuaries and the Congressional Budget Office estimated earlier this year.
Many features of Social Security are automatically linked to prices or wages and will rise in 2014. For a complete update, see the table here.