Social security has decided to offer a COLA of 2.3%. It will mean an extra $24 per month in the average check. The cost of living adjustment means that the monthly benefit for the typical retired worker in 2008 will go from $1,055 currently to $1,079 next year.
The average retired couple, both receiving Social Security benefits, will see their monthly check go from $1,722 to $1,761, an increase of $39.
The standard SSI payment for an individual will go from $623 per month to $637.
The average monthly check for a disabled worker will go from $981 to $1,004.
The government also announced Wednesday that nearly 12 million wage earners will pay higher taxes next year because the maximum amount of Social Security earnings subject to the payroll tax will rise from $97,500 currently to $102,000. In all, an estimated 164 million workers will pay Social Security taxes in 2008.
The 2.3 percent increase is the smallest since a 2.1 percent rise in 2004. It compares to an increase of 3.3 percent last year and a jump of 4.1 percent in 2006, which had been the biggest advance in 15 years.
The COLA is based on the change in consumer prices from the July-September quarter of this year compared to the same period last year. Benefit payments have been tied to inflation since 1975.
The adjustment, announced by the Social Security Administration, will go to more than 54 million Americans. Nearly 50 million receive Social Security benefits and the rest get Supplemental Security Income payments aimed at helping the poor.
This all sounds like a noble move on the part of the social security system. The problem is that it is debatable whether the increase is enough to counter the rising costs across the board from energy to food. I find it rather bizarre that the government fails to include food, energy, and other costs such as housing and medical costs in its inflation rate calculation. The supposed reason is that these areas are ‘too volatile’
What this should say to people is that social security is only part of your retirement plan and should never be relied upon exclusively.
An estimated 10,000 people a day will become eligible for Social Security benefits over the next two decades, putting a severe strain on the pension program.
If no changes are made, the Social Security trust fund is projected to deplete its reserves in 2041 and even sooner, in 2017, Social Security is scheduled to start paying out more in benefits than it collects each year in payroll taxes. Medicare is facing even greater funding problems because of the rapidly rising cost of health care.
No comments yet.