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Social Security Benefit Increases 2.7 Percent for
2005
 Oct.
19, 2004 - Monthly Social Security and Supplemental Security Income
benefits for more than 52 million Americans will increase 2.7 percent in
2005 - about $25 per month for the average retired worker, the Social Security Administration announced today. (Note: see
Fact Sheet below story.)
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This increase is the largest since benefits rose by
3.5 percent in 2001. A 2.1 percent increase went into effect at the
beginning of this year.
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 2.7 percent.
The government also reported today, however, that
consumer prices for the first nine months of 2004 have risen at a rate
of 3.5 percent.
The 2.7 percent Cost-of-Living Adjustment (COLA)
will begin with benefits that more than 47 million Social Security
beneficiaries receive in January 2005. 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 $90,000 from $87,900. Of the
estimated 159 million workers who will pay Social Security taxes in
2005, about 9.9 million will pay higher taxes as a result of the
increase in the taxable maximum in 2005.
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, announced last month. 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.
Fact Sheet
Social Security
2005 SOCIAL SECURITY
CHANGES
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: |
|
Tax
Rate |
2004
|
2005 |
|
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 Earnings Taxable:
|
2004
|
2005
|
|
|
$87,900
|
$90,000
|
|
Medicare (HI only)
|
No Limit
|
|
Retirement
Earnings Test Exempt Amounts: |
2004
|
2005
|
|
Under full retirement age
NOTE: One dollar in benefits
will be withheld for every $2 in earnings above the
limit.
|
$11,640/yr.
($970/mo.)
|
$12,000/yr.
($1,000/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. |
$31,080/yr.
($2,590/mo.)
|
$31,800/yr.
($2,650/mo.)
|
|
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: |
2004
|
2005
|
|
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
|
2005
|
|
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.
|
$1,825/mo.
(Age 65 and 4 months)
|
$1,939/mo.
(Age 65 and 6 months)
|
| SSI Resources Limits: |
2004
|
2005
|
|
Individual
|
$2,000
|
$2,000
|
|
Couple
|
$3,000
|
$3,000
|
| Estimated Average Monthly Social Security
Benefits Payable in January 2005: |
Before
2.7% COLA
|
After
2.7% COLA
|
|
All Retired Workers
|
$ 930
|
$ 955
|
|
Aged Couple, Both Receiving Benefits
|
$1,532
|
$1,574
|
|
Widowed Mother and Two Children
|
$1,927
|
$1,979
|
|
Aged Widow(er) Alone
|
$ 896
|
$ 920
|
|
Disabled Worker, Spouse and
One or More Children
|
$1,458
|
$1,497
|
|
All Disabled Workers
|
$ 871
|
$ 895
|
Copyright: SeniorJournal.com |
