Social Security And You
Millions of Americans who get Social Security or Supplemental Security Income (SSI) benefit payments will receive an annual cost-of-living adjustment (COLA) next year. The COLA helps ensure that their benefit payments keep pace with inflation. Last month, Social Security announced that more than 52 million people will receive a 2.7 percent increase in their monthly benefit payments. The 2.7 percent hike will begin with benefits that Social Security beneficiaries receive in January 2005. Increased payments to SSI beneficiaries will begin on December 30.
The COLAs are tied directly to the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Legislation enacted in 1973 provides for annual, automatic cost-of-living adjustments.
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 from $87,900 to $90,000.
It is important to note that no one’s Social Security benefit will decrease as a result of the 2005 Medicare Part B premium increase that was announced earlier. By law, the Part B premium increase cannot be larger than a beneficiary’s COLA increase. Information about Medicare changes for 2005 can be found at www.hhs.gov – the Internet site for the Department of Health and Human Services.
This is the 30th straight yearly rise in benefits since automatic cost-of-living adjustments began in 1975. Before 1975, it took an act of Congress to increase Social Security benefit payments. In fact, the first increase was not authorized until 1950, 15 years after the original Social Security Act was passed, and 10 years after the first monthly benefits were paid.
2005 SOCIAL SECURITY
Cost-of-Living Adjustment (COLA):
Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2003 through the third quarter of 2004, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 2.7 percent COLA for 2005.
Other important 2005 Social Security information is as follows:
2004 2005 Tax Rate: 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 :
Social Security (OASDI only)
$87,900 $90,000, Medicare
• Quarter of Coverage:
• Retirement Earnings Test Exempt Amounts: Under full retirement age $11,640/yr. $12,000/yr.
NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit.
The year an individual reaches full $31,080/yr. $31,800/yr. retirement age, ($2,590/mo.), ($2,650/ mo.).
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.
There is no limit on earnings beginning the month an individual attains full retirement age (65 and 4 months for retirees born in 1939; 65 and 6 months for those born in 1940).
Social Security Disability Thresholds: Substantial Gainful Activity (SGA) Non-Blind, $810/mo., $830/mo. Blind, $1,350/mo., 1,380/mo. Trial Work Period (TWP) $580/mo. $590/mo.
• Maximum Social Security Benefit: Worker Retiring at Full Retirement Age in 2004 and 2005: $1,825/mo., $1,939/mo. Age 65 and 4 months), (Age 65 and 6 months).
NOTE: For retirees born in 1939, full retirement age is 65 and 4 months; for those born in 1940, it is 65 and 6 months.
Full retirement age will gradually increase to age 67 for those born in 1960 and later.
• SSI Federal Payment Standard: Individual $564/mo., $579/mo. Coup-
le $846/mo. $869/mo.
• SSI Resources Limits:
Individual, $2,000, $2,000, Couple,
• SSI Student Exclusion:
Monthly limit$1,370 $1,410, Annual
limit $5,520 $5,670.
By James Glasser, Manager, Far Rockaway Social Security Center