Little Increase In Social Security Benefits Next Year

(Riverwoods, Ill., October 21, 1998) -- For the third year running, Social Security beneficiaries will see a smaller annual increase in their benefits due to low inflation, according to CCH INCORPORATED, a leading provider of pension, tax and business law information. The annual increase will be 1.3 percent according to CCH Social Security analyst Avram Sacks, J.D., based on cost-of-living figures released by the Labor Department and the Social Security Administration. The increase will be officially published in the Federal Register by the end of October. It will first be applied to December 1998 benefits, which are paid in January of 1999.

The cost of living adjustment, or COLA, for 1999 compares with a 2.1 percent increase in benefits received in 1998 and a 2.9 percent increase in 1997. Since automatic COLAs became effective in 1975, they have ranged from a high of 14.3 percent calculated in 1980 and applied to benefits in the last half of that year to a previous low of 1.3 percent calculated in 1986 and applied to benefits paid in 1987.

"Low inflation is generally beneficial to people living on Social Security, but a low cost of living adjustment is an obvious consequence," Sacks said.

The COLA is applied to several types of benefits: retirement, disability and survivors, and to the family maximum benefit -- the maximum that can be paid if more than one family member is receiving benefits based on one wage earner’s account. It also affects what are known as "transitional" benefits -- a special calculation applicable to those who reach ages 78 through 82 in 1999 -- and to "special age 72" benefits which are limited benefits paid to certain aged workers and their spouses, or surviving spouses, in cases where the worker is not credited with enough "quarters of coverage" to qualify as "fully insured" under the Social Security laws, Sacks said.

Earnings Limits Also Rise

The amount that certain Social Security beneficiaries can earn without having their benefits reduced -- "Earnings Test Exempt Amounts" in Social Security terminology -- will also go up next year.

Beneficiaries who are 65 through 69 years old will be able to earn up to $15,500 in 1999, or $1,292 per month, without having their benefits trimmed. This is an increase of $1,000 over the 1998 annual limit of $14,500. Exempt amounts for this age group have been set by statute for future years up until 2002 when the exempt amount will be $30,000.

People under age 65 who are receiving benefits can earn up to $9,600 in 1999, or $800 per month, without having their benefits reduced. This is an inflation-adjusted increase of $480 a year over the 1998 limit.

Beneficiaries age 70 and older are not subject to benefit reductions based on earnings.

About CCH INCORPORATED

CCH INCORPORATED, Riverwoods, Ill., is a leading provider of employment law and human resource information, including Social Security Reporter, Unemployment Insurance Reports, Payroll Management Guide, Pension Plan Guide and Employee Benefits Management. CCH also provides tax and business law information in print and electronic form for accounting, legal and health care professionals. CCH is a wholly owned subsidiary of Wolters Kluwer U.S.

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