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Modest Social Security Increase Is Still Larger Than Expected, CCH Says

(RIVERWOODS, ILL., October 18, 2007) – Social Security beneficiaries in 2008 will see a relatively modest increase in their monthly checks, according to CCH, a leading provider of tax, benefits and payroll law information and software and a part of Wolters Kluwer Law & Business ( As a result of inflation, an increase of 2.3 percent will be applied to this coming year’s benefits, starting with December 2007 benefits, which are paid in January 2008. This is the smallest increase in four years.

The 2.3-percent cost-of-living adjustment, or COLA, will produce an estimated monthly benefit of $1,079 for all retired workers in 2008, $35 a month more than in 2007. However, $2.90, or 8.3 percent, of that increase will be eaten up by a rise in the standard premium paid by beneficiaries enrolled in Medicare Part B in 2008. With a total monthly Medicare Part B standard premium of $96.40 in 2008, Social Security beneficiaries enrolled in Medicare Part B will see that average $35 benefit increase reduced to $32 after rounding required by law. A relatively small number of Medicare Part B enrollees with higher incomes, about 5 percent, will pay a higher premium based on their income. Medicare Part B enrollees in the highest income bracket (i.e., those filing individual tax returns greater than $205,000 or joint returns greater than $410,000) will pay a total monthly premium in 2008 of $238.40.

A typical married couple, both receiving benefits, can expect to find $1,761 in their monthly benefit checks in 2008, $48 more than the comparable 2007 benefit, while the average widow or widower living alone will receive an average benefit of $1,041, an increase of $33. These amounts do not reflect deductions for Medicare premiums.

A gradual rise in full retirement age began in 2000 resulting from amendments in 1983 to the Social Security Act, increasing full retirement age from age 65 to age 67. The only individuals attaining full retirement age in 2008 will be individuals born in 1942 attaining age 65 and 10 months. For such individuals, the maximum possible benefit remains at $2,116, as determined in 2007, which is increased to $2,164 in 2008 on account of the 2.3 percent cost-of-living adjustment.

The maximum benefit payable to someone born in 1943 who still wishes to retire upon reaching age 65 in 2008 is $2,030. However, if someone born in 1943 waits until they reach their full retirement age of 66 in 2008, their maximum benefit will be $2,185 plus the 2008 COLA, which will be announced in October 2008. Full retirement age will remain at age 66 for the next 12 years for individuals born in 1943 through 1954.

The Social Security COLA is applied to several types of benefits: retirement, disability, survivors – such as children and widow(er)s – and to the maximum family benefit, which is the maximum that can be paid if more than one family member is receiving benefits based on one wage earner’s account.

Food, Shelter, Medical Costs Drive Increase

“The increase is largely driven by an increase in food, beverage, shelter and medical costs,” said Avram Sacks, JD, CCH Social Security law analyst. Shelter costs (not including energy) contributed to about 46 percent of the increase, while food/beverage and medical costs contributed 31 percent and 10 percent , respectively, to the overall increase. The overall increase was less than last year’s 3.3 percent cost-of-living adjustment primarily due to the tremendous slow-down in the cost of petroleum-based energy commodities. For the 12 months ending August 2006, there was a 15.1 percent increase, while for the same 12-month period ending in 2007, there was a 2.5 percent decline.

“The magnitude of the increase was not expected by the Board of Trustees of the Federal Old-Age, Survivors and Disability Insurance (OASDI) Trust Fund last March,” said Sacks. “At that time, they predicted a 1.4 percent increase, just under two-thirds of the actual figure based on the rise of the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter of 2006 through the third quarter of 2007.”

Earnings Limits Also Rise

The amounts that certain Social Security beneficiaries can earn without having their benefits reduced – “Retirement Test Exempt Amounts” in Social Security terminology – also will go up next year.

Workers under full retirement age who are receiving benefits can earn up to $13,560 in 2008, or $1,130 per month, without having their benefits reduced. This is an increase of $600 annually over the 2007 limit.

A modified test applies to workers who reach the full retirement age of 66 in 2008. In each month before they reach full retirement age, these individuals may earn up to $3,010 without having their benefits reduced. Once they reach full retirement age, benefits are no longer subject to any retirement test.

“This is an increase of $140 over the 2007 monthly limit for these workers,” Sacks noted.

An “earnings test” for beneficiaries at full retirement age through age 69 was abolished by legislation in 2000. Beneficiaries age 70 and older have not been subject to benefit reductions based on earnings since 1983.

Disability Thresholds

The amount of monthly earnings in 2007 that will give rise to a presumption that a disability beneficiary is no longer disabled – that is, the amount that’s deemed sufficient to demonstrate an ability to engage in “substantial gainful activity” is $940, an increase of $40 from 2007. A higher threshold of $1,570 per month applies to blind beneficiaries.

Disability beneficiaries may work for as many as nine months during any 60-month period without affecting their rights to receive benefits. This is known as “trial work.” In 2008, a disabled beneficiary who works will not be treated as having engaged in trial work for any month in which his or her earnings are no more than $670, an increase of $30 over the 2007 limit.

SSI Earnings Limits

There is no trial work period for Supplemental Security Income (SSI) disability beneficiaries. However, if an SSI beneficiary is working, has only earnings and doesn’t pay expenses in order to work, the person may earn up to $1,359 per month in 2008 before the person’s SSI federal cash benefits stop. The amount was $1,331 in 2007. This is based on an exclusion of $85 per month (assuming the person has no other income) for the first $85 dollars of monthly earned income, plus a monthly deduction of $1 for every $2 earned thereafter. SSI beneficiaries in states that provide a supplement to the federal SSI benefit can earn even more before cash payments stop. However, if an individual has earnings of $940 or more in 2008, then the person would be considered to be engaging in “substantial gainful activity” and would probably not be eligible for SSI disability benefits, unless he or she is blind.

About Wolters Kluwer Law & Business

Wolters Kluwer Law & Business is a leading provider of research products and software solutions in key specialty areas for legal and business professionals, as well as casebooks and study aids for law students. Its major product lines include Aspen Publishers, CCH, Kluwer Law International and Loislaw. Its markets include law firms, law schools, corporate counsel and professionals requiring legal and compliance information. Wolters Kluwer Law & Business, a unit of Wolters Kluwer, is based in New York City and Riverwoods, Ill. The Wolters Kluwer Law & Business human resources site is

Wolters Kluwer is a leading global information services and publishing company. The company provides products and services for professionals in the health, tax, accounting, corporate, financial services, and legal and regulatory sectors. Wolters Kluwer had 2006 annual revenues of €3.4 billion, employs approximately 18,450 people worldwide, and maintains operations across Europe, North America, and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. For more information, visit

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