Social Security And You
Each New Year brings along a number of changes — including changes in Social Security benefit amounts, taxable income limits, and earnings test exempt amounts. Here is a brief run-down of important Social Security changes in 2006.
Beginning in January 2006, a 4.1 percent cost-of-living adjustment (COLA) was applied to all Social Security and Supplemental Security Income (SSI) payments. This means that the average monthly benefit for a retired worker in 2006 is $1,002 (up from $963 in 2005); the average monthly benefit for a disabled worker in 2006 is $939 (up from $902); and the average monthly benefit for a widowed parent and two children in 2006 is $2,074 (up from $1,992).
Other Social Security changes in 2006 also are worth noting. For example, a worker now pays Social Security tax on up to $94,200 of annual income (up from $90,000). Of course, the Medicare tax is of 1.45 percent applies to all earnings. A worker earns one credit of coverage after paying taxes on $970 in earnings (up from $920). As always, four credits may be earned each year and a person generally needs 40 credits to be eligible for retirement benefits.
Beneficiaries who are under their full retirement age can now earn up to $12,480 annually (up from $12,000) without any reduction in their benefits. There is no earnings test once you reach your full retirement age. To determine your full retirement age, or to learn about other changes the New Year has ushered in, visit www.socialsecurity.gov .