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Social Security Makes Biggest Jump in 15 Years with 4.1 Percent for 2006

Oct. 14, 2005 – Social Security announced today a 4.1 percent increase in the monthly benefit paid to over 52 million American senior citizens and others who will receive Social Security or Supplemental Security Income in 2006. It is the largest percentage increase since 1991, when the boost was 5.4 percent.

It is a welcome gain for seniors but will not offset the expenses many will have in 2006 from the increases in Medicare and the addition of the prescription drug program. Those with high drug costs, however, may save substantially with the new Part D.

The average retired couple, both receiving Social Security benefits, will see their monthly check go from $1,583 to $1,648.

The standard SSI payment will go from $579 to $603 per month for an individual and $869 to $904 for a couple.

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 4.1 percent.

The 4.1 percent Cost-of-Living Adjustment (COLA) will begin with benefits that more than 48 million Social Security beneficiaries receive in January 2006. Increased payments to 7 million Supplemental Security Income beneficiaries will begin on December 30.

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 $94,200 from $90,000. Of the estimated 161 million workers who will pay Social Security taxes in 2006, about 11.3 million will pay higher taxes as a result of the increase in the taxable maximum in 2006.

In 2006, the age for being eligible to collect Social Security retirement income will also take a jump. Those becoming eligible in 2006 will be closer to 66 than 65. To become eligible for benefits in 2006, seniors must be 65 years and eight months old.

It is important to note, says the Social Security Administration, that no one’s Social Security benefit will decrease as a result of the 2006 Medicare Part B premium increase, announced last month. By law, the Part B premium increase cannot be larger than a beneficiary’s COLA increase. Information about Medicare changes for 2006 can be found at www.cms.hhs.gov.

Fact Sheet Issued by Social Security Administration

Cost-of-Living Adjustment (COLA):

Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2004 through the third quarter of 2005, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 4.1 percent COLA for 2006. Other important 2006 Social Security information is as follows:

Social Security Today

• In 2005, more than 48 million Americans will receive approximately $518 billion in Social Security benefits.

• Social Security is the major source of income for most of the elderly.
  • More than nine out of ten individuals age 65 and older receive Social Security benefits.
  • Social Security benefits represent 39% of income of the elderly.
  • About two-thirds of aged Social Security beneficiaries receive 50% or more of their income from Social Security.
  • Social Security is the only source of income for approximately 22% of the elderly.
     
• Social Security provides more than just retirement benefits.
  • Retired workers and their dependents account for 69% of total benefits paid.
  • Disabled workers and their dependents account for 17% of total benefits paid.
    • About 91 percent of workers age 21-64 in covered employment and their families have protection in the event of a long-term disability.
    • Almost 3 in 10 of today’s 20 year-olds will become disabled before reaching age 67.
    • 72% of the private sector workforce has no long-term disability insurance.
       
  • Survivors of deceased workers account for 14% of total benefits paid.
    • One in seven Americans will die before reaching age 67.
    • An estimated 97% of young children and their mothers and fathers are insured for survivors benefits through Social Security.

• An estimated 159 million workers, 96% of all workers, are covered under Social Security.

·         53% of the workforce has no private pension coverage.

·         32% of the workforce has no savings set aside specifically for retirement.

• In 1935, the life expectancy of a 65-year-old was 12½ years, today it’s 17½ years.
• By 2031, there will be almost twice as many older Americans as today -- from 37 million today to 71 million.
• There are currently 3.3 workers for each Social Security beneficiary. By 2031, there will be 2.1 workers for each beneficiary.

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