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Social Security News

Social Security to Give Senior Citizens Largest Cost-of-Living Increase Since 1982 5.8%

COLA will begin with benefits that over 50 million Social Security beneficiaries receive in January 2009

Oct. 16, 2008 It is now official senior citizens will get their largest pay increase from Social Security since 1982. The cost-of-living increase (COLA) will be an increase of 5.8 percent starting in January of 2009, the Social Security Administration announced today. 

 

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Social Security COLA for 2009 Still Heading Toward Six Percent Increase with New Data

Bureau of Labor Statistics says critical consumer price index jumped 5.9% in August

Sept. 16, 2008

Largest Social Security COLA Increase in Over 25 Years May Greet Senior Citizens in 2009

Current trends indicate it will be over 6% and largest cost-of-living adjustment since 1982; announcement due next month

Sept. 15, 2008


Read more Social Security News

 

Social Security and Supplemental Security Income benefits increase automatically each year based on the rise in the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the prior year to the corresponding period of the current year.  This year's increase in the CPI-W was 5.8 percent. 

The 5.8 percent Cost-of-Living Adjustment (COLA) will begin with benefits that over 50 million Social Security beneficiaries receive in January 2009.  Increased payments to more than 7 million Supplemental Security Income beneficiaries will begin on December 31.

Some other changes that take effect in January of each year are based on the increase in average wages.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $106,800 from $102,000.  Of the estimated 164 million workers who will pay Social Security taxes in 2009, about 11 million will pay higher taxes as a result of the increase in the taxable maximum. 

History of Increases

 

Month

Year

% Ch.

 

January

2009

5.80%

 

January

2008

2.30%

 

January

2007

3.30%

 

January

2006

4.10%

 

January

2005

2.70%

 

January

2004

2.10%

 

January

2003

1.40%

 

January

2002

2.60%

 

January

2001

3.50%

 

January

2000

2.50%

 

January

1999

1.30%

 

January

1998

2.10%

 

January

1997

2.90%

 

January

1996

2.60%

 

January

1995

2.80%

 

January

1994

2.60%

 

January

1993

3.00%

 

January

1992

3.70%

 

January

1991

5.40%

 

January

1990

4.70%

 

January

1989

4.00%

 

January

1988

4.20%

 

January

1987

1.30%

 

January

1986

3.10%

 

January

1985

3.50%

 

January

1984

3.50%

 

July

1982

7.40%

 

July

1981

11.20%

 

July

1980

14.30%

 

July

1979

9.90%

 

July

1978

6.50%

 

July

1977

5.90%

 

July

1976

6.40%

 

July

1975

8.00%

 

The COLA for December 1999 was originally determined as 2.4 percent based on CPIs published by the Bureau of Labor Statistics. Pursuant to Public Law 106-554, however, this COLA shown for January 2000 is effectively now 2.5 percent.

 

2009 Social Security Changes

Cost-of-Living Adjustment (COLA):

Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2007 through the third quarter of 2008, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 5.8 percent COLA for 2009. 

Other important 2009 Social Security information is as follows:

Estimated Average Monthly Social Security Benefits Payable in January 2009:

Before
5.8% COLA

After
5.8% COLA

All Retired Workers

$1,090

$1,153

Aged Couple, Both Receiving Benefits

$1,773

$1,876

Widowed Mother and Two Children

$2,268

$2,399

Aged Widow(er) Alone

$1,051

$1,112

Disabled Worker, Spouse and One or More Children

$1,695

$1,793

All Disabled Workers

$1,006

$1,064

Tax Rate

2008

2009

Employee

 7.65%

 7.65%

Self-Employed

15.30%

15.30%

NOTE: The 7.65% tax rate is the combined rate for Social Security and Medicare.  The Social Security portion (OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see below).  The Medicare portion (HI) is 1.45% on all earnings.

Maximum Taxable Earnings:

2008

2009

Social Security (OASDI only)

$102,000

$106,800

Medicare (HI only)

No Limit

Quarter of Coverage:

2008

2009

Earnings needed to earn one Social Security credit

$1,050

$1,090

Retirement Earnings Test Exempt Amounts:

2008

2009

Under full retirement age
NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit.

$13,560/yr.
($1,130/mo.)

$14,160/yr.
($1,180/mo.)

The year an individual reaches full retirement age
NOTE: Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit.

$36,120/yr.
($3,010/mo.)

$37,680/yr.
($3,140/mo.)

There is no limit on earnings beginning the month an individual attains full retirement age.

Social Security Disability Thresholds:

2008

2009

Substantial Gainful Activity (SGA)

Non-Blind

$  940/mo.

$  980/mo.

Blind

$1,570/mo.

$1,640/mo.

Trial Work Period (TWP)

$  670/mo.

$  700/mo.

Maximum Social Security Benefit:
Worker Retiring at Full Retirement Age

2008

2009

 

$2,185/mo.

$2,323/mo.

SSI Federal Payment Standard:

2008

2009

Individual

$ 637/mo.

$ 674/mo.

Couple

$ 956/mo.

$1,011/mo.

SSI Resources Limits:

2008

2009

Individual

$2,000

$2,000

Couple

$3,000

$3,000

SSI Student Exclusion:

2008

2009

Monthly Limit

$1,550

$1,640

Annual Limit

$6,240

$6,600

 

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