Secure Your Future
Social Security benefits increase in January
Nov 3, 2005 2:18 PM
On Oct. 14, the Social Security Administration announced a 4.1 percent Cost of Living Adjustment (COLA), the largest since 1990. This will increase the income of 48 million recipients. The increase, which will take effect in January, and is based on the Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2004 to the third quarter of 2005.
The UFT has been deeply involved in the battle to preserve the guaranteed benefits of Social Security. The annual COLA is a lifeline for the eight out of 10 Americans aged 65 and over who rely on Social Security as their largest source of income. The COLA is the only guaranteed protection Social Security recipients have against rising prices. Even with modest inflation over the last 10 years, without the COLA recipients’ incomes would have been reduced by more than 25 percent.
Social Security pays three types of benefits. Old-age insurance (retirement) goes to about 30 million retirees, more than 2.5 million spouses and more than a half-million children.
The second type is survivors’ insurance. There are more than 4.6 million survivors of deceased workers, including more than 1.8 million children, who receive benefits based on the earnings of a deceased spouse or parent.
Third, some recipients receive a benefit based on disability. Out of more than 6.1 million disability insurance beneficiaries more than 1.5 million are children.
Most people do not realize that some 4 million children, including many of our students, receive Social Security.
Social Security is truly an intergenerational program. It is intergenerational not only because so many children receive benefits but because our parents, grandparents and other family members who receive Social Security save the working generation from having to support them.
Other important changes also take place in January. Because of an increase in average wages, the maximum amount of earnings subject to FICA (contributions to pay for future Social Security) will increase to $94,200 from $90,000 in 2005. This will increase the annual maximum contribution to Social Security by $260.40.
Full retirement age under Social Security in 2006 will be 65 years 8 months. Teachers can retire as early as age 55, but cannot collect Social Security retirement benefits until age 62.
A Social Security recipient younger than full retirement age will have $1 in benefits withheld for every $2 in earnings above the 2006 limit of $12,480 per year ($1,040 per month).
During the calendar year before an individual reaches full retirement age, if he or she is receiving Social Security then $1 in benefits will be withheld for every $3 in earnings above $33,240 per year ($2,770 per month). But beginning the month a person reaches full retirement age there is no earnings limit. A person can earn any amount without having Social Security benefits reduced.
In 2006, the premium for Medicare Part B (doctors and related fees) will rise to $88.50 per month - more than a 13 percent increase. This can be a financial burden to the person paying the annual cost of $1,200 in 2006. Medical costs keep rising by double digits. The cost of Medicare B will not affect our members or their spouses/domestic partners because the UFT lobbied hard and got a law enacted that requires New York City to reimburse the entire cost. Therefore, as the premium increases you will be reimbursed for the increase.
“On retirement” 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).
