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Social
Security Payout to Rise in January By
John M. Berry, the Monthly payments to the nation's 47 million recipients of Social Security benefits will rise 2.1 percent in January, with the average benefit for retired workers rising $19, to $922, the government announced yesterday. Most retired federal civilian, military and Foreign Service workers will get the same 2.1 percent increase in their pension benefits, which is based on the increase in the consumer price index from the third quarter of last year to the same period this year. Retirees covered by the new Federal Employees Retirement System who are 62 or older will receive a 2 percent increase. Separately, Medicare deductibles and premiums will also rise, although they are set annually according to different formulas. Last month Social Security paid $43.5 billion in the form of retirement, survivors and disability benefits. An additional $3.2 billion went to low-income people under the Supplemental Security Income program, whose beneficiaries will also get the 2.1 percent cost-of-living adjustment in their payments on Dec. 31. Some people get both Social Security and SSI benefits. The 2.1 percent COLA is half again as large as the 1.4 percent increase made in January of this year. Consumer price inflation was held down last year in part by falling oil prices. The reverse was true this year. The Social Security Administration said the maximum benefit for a worker retiring at the full retirement age will rise to $1,825 a month next year from $1,741 this year. The spouse of a retired worker can also receive benefits based on the worker's earnings. Most retirees, however, do not qualify for the maximum benefit because their earnings during their working years were not high enough. Next year the average-aged couple, both receiving benefits, will get $1,523 a month, up $31 from this year, for a total of $18,276. Disabled workers will get an average benefit of $862, up from $844 this year. The full retirement age is also moving up. This year people born in 1938 have had to wait an extra two months -- that is, they have to be 65 years and two months -- to qualify for full benefits and avoid having those benefits perhaps reduced by income they have earned. Next year, people born in 1939 will have to wait for four months beyond their 65th birthdays to qualify for full benefits. Those 62 and over claiming benefits prior to their full retirement age have those benefits reduced according to how early their choose to get them. This year the amount a beneficiary can earn without losing some of the benefit is $11,520. The amount will rise to $11,640 next year. In the year a beneficiary reaches full retirement age, the benefit reduction is $1 for every $3 earned above that limit. For other early retirees, the reduction is $1 for every $2 above the limit. There will be no change in the 6.2 percent payroll tax paid on earnings by both workers and their employers to cover Social Security benefits, or the 12.4 percent paid by self-employed workers. But the amount of earnings taxed will rise to $87,900, from $87,000 this year. The 1.45 percent payroll tax paid to finance Medicare applies to all earnings. The Department of Health and Human Services said that the monthly premium for Part B of Medicare, which covers physician services, outpatient hospital services and some other costs, will rise by $7.90, to $66.60. That represents a 13.5 percent increase over this year's premium of $58.70. The deductible paid by a beneficiary for a stay of up to 60 days in a hospital will also increase to $876, up $36 from this year's $840 figure. The premiums are supposed to finance one-fourth of Medicare costs for enrollees age 65 or over. Copyright ©
2002 Global Action on Aging
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