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.
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:
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.
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.
