Secure Your Future
Social Security benefits will go up again in 2009
Nov 6, 2008 1:49 PM
The Social Security Administration has stated that more than 50 million Social Security recipients will receive an increase of 5.8 percent in 2009. This is the largest increase since 1982. Last year, for example, the increase was only 2.3 percent.
Social Security income benefits increase automatically each year since benefits have been tied to inflation since 1975. The cost-of-living adjustment is based on the rise in the Consumer Price Index from the July-to-September period from the prior year to the same period of the current year. The COLA will begin with benefits that are received in January 2009.
The larger increase is due to the large price increases in energy, fuel and food costs. Older Americans who have seen their retirement savings go down will welcome it.
About one-third of older Americans count on Social Security for all of their income, and for almost two-thirds it counts for at least half of their income. This greater-than-usual increase, plus the fact that the Medicare Part B trust fund is more solvent, means that most retirees will not see the COLA eaten up by higher Medicare Part B premiums, as they have in the past.
Medicare Part B
The standard Medicare Part B monthly premium will hold steady at $96.40 a month. This is the rate for a single taxpayer whose annual income is $85,000 or less, or if you’re married and filed a joint return and your income is $170,000 or less. About 5 percent of current Part B enrollees will pay a higher premium. Those higher premiums are paid by individuals with higher incomes. The highest rate per month is $308.30 for single individuals who earn more than $213,000 or married couples who earn above $426,000.
Social Security will use the income reported two years ago on your IRS income tax return. For example, the income reported on your 2007 tax return will be used to determine your monthly Part B premium for 2009.
UFT members get a refund of their Part B premiums from the city because of legislation in the City Council that the UFT fought for. A retiree who earns $85,000 or less per year gets a refund of $1,156.80. This is but one of many reasons members should be contributing to COPE.
Other Social Security changes
Because of an increase in average wages, the maximum amount of earnings subject to FICA withholding will be capped at $106,800. That is up from $102,000 in 2008. This will increase the annual maximum paid next year by $297.60 to a total of $6,621.60. The maximum in 2008 is $6,324.
Of the estimated 164 million workers who will pay into Social Security next year, about 11 million will pay higher taxes as a result of the increase in the taxable maximum.
The contribution rate remains unchanged. The rate is 7.65 percent for both the employee and the employer until the cap is reached. After the cap is reached, both the employee and the employer continue to pay 1.45 percent (the rate for Medicare Part A) on all earnings.
Full retirement age in 2009 will be age 66. Those who reach age 62 will be eligible for reduced benefits.
The maximum benefit for a worker retiring at full retirement age (66) in 2009 is $2,323 per month. The average monthly Social Security benefit in 2009 for all retired workers is $1,153 per month. A widowed mother and two children will receive an average $2,399 per month. A disabled worker, spouse and one or more children will average $1,793 a month. As you know, Social Security is not only a retirement benefit, but also an insurance program that provides survivors benefits as well as disability benefits.
Annual Benefit Statements
The July 1, 2007-June 30, 2008 Annual Benefit Statements were sent at the end of October and you should have received yours. If you did not, contact the Teachers’ Retirement System. The ABS contains your account balances, the names of your beneficiaries, your years of credited service and, for those eligible to retire, and an estimate of your retirement allowance.
If you have any questions, contact TRS. If any corrections are necessary, now is the time to get them done. Do not wait until you are approaching retirement.
Check your beneficiaries for both the Qualified Pension Plan and Tax-Deferred Annuity plans. If none are listed, file Designation of Beneficiary forms available from TRS or the UFT. If your listed beneficiaries are no longer appropriate, file a new form.
TDA investment choices
Members wishing to change their TDA investment choices beginning Jan. 1 should file their application by the end of November.
“Secure your future” is compiled and written by Mel Aaronson, Sandra March and Mona Romain, teacher-members of the NYC Teachers’ Retirement Board. For further information on items discussed, call your UFT borough office or the TRS. BRONX: 1-718-379-6200; BROOKLYN: 1-718-852-4900; MANHATTAN: 1-212-598-6800; QUEENS: 1-718-275-4400; STATEN ISLAND: 1-718-605-1400; Teachers’ Retirement System: 1-888-8NYC-TRS (692-877), www.trs.nyc.ny.us.
