The increase will amount to about an additional $21 a month, one of the lowest since automatic adjustments were adopted in 1975.
A woman walks past a sign for the Social Security Administration in Los Angeles. More than 56 million Social Security recipients will see their monthly payments go up by 1.7 percent next year.
The increase, which starts in January, is tied to a measure of inflation released today.
It shows that inflation has been relatively low over the past year, despite the recent surge in gas prices, resulting in one of the smallest increases in Social Security payments since automatic adjustments were adopted in 1975.
Social Security payments for retired workers average $1,237 a month, or about $14,800 a year. A 1.7 percent increase will amount to about $21 a month, or $252 a year, on average.
Social Security recipients received a 3.6 percent increase in benefits this year after getting none the previous two years.
About 8 million people who receive supplemental security income will also receive the cost-of-living adjustment, or COLA, meaning the announcement will affect about 1 in 5 U.S. residents.
Social Security also provides benefits to millions of disabled workers, spouses, widows, widowers and children.
“The annual COLA is critically important to the financial security of the (56) million Americans receiving Social Security benefits today,” said Nancy LeaMond, AARP’s executive vice president. “Amid rising costs for food, utilities and health care and continued economic uncertainty, the COLA helps millions of older Americans maintain their standard of living, keeping many out of poverty.”
The amount of wages subjected to Social Security taxes is going up, too. Social Security is supported by a 12.4 percent tax on wages up to $110,100.
That threshold will increase to $113,700 next year, resulting in higher taxes for nearly 10 million workers and their employers, according to the Social Security Administration.
Half the tax is paid by workers and the other half is paid by employers. Congress and President Barack Obama reduced the share paid by workers from 6.2 percent to 4.2 percent for 2011 and 2012.
The temporary cut, however, is due to expire at the end of the year.