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Social Security Beneficiaries Get Modest Increase
(RIVERWOODS, ILL., October 23, 2001) Social Security beneficiaries in 2002 will
see a modest increase in their monthly checks, according to CCH INCORPORATED (CCH), a
leading provider of tax and payroll law information and software. As a result of
inflation, an increase of 2.6 percent will be applied to this coming years benefits,
starting with December 2001 benefits, which are paid in January 2002.
The 2.6-percent cost-of-living adjustment, or COLA, will produce an estimated monthly
benefit of $874 for all retired workers in 2002, $29 a month more than in 2001. A typical
married couple, both receiving benefits, can expect to find $1,454 in their monthly
benefit checks in 2002, $44 more than the comparable 2001 benefit, while the average widow
or widower will receive an average benefit of $841, an increase of $30. The maximum
monthly benefit payable to an individual retiring at age 65 in January 2002 will be
$1,660, $124 more per month than a similar age-65 retiree in January 2001.
Gas, Electricity, Housing Costs Drive Increase
The increase is largely driven by an increase in service costs since last September,
with the bulk of the increase arising from increased costs of natural gas, electricity and
housing, according to Avram Sacks, JD, CCH Social Security analyst.
"The magnitude of the increase was fairly accurately forecast by the Social
Security trustees last March," said Sacks. "At that time, they predicted a 2.8-
percent increase, only two-tenths of a percent higher than the actual figure based on the
rise of the Consumer Price Index for Urban Wage Earners and Clerical Workers from the
third quarter of 2000 through the third quarter of 2001."
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 age 65 who are receiving benefits can earn up to $11,280 in 2002, or $940
per month, without having their benefits reduced. This is an increase of $600 annually
over the 2001 limit.
A modified test applies to workers who reach age 65 in 2002. In the months before their
65th birthday, these individuals may earn up to $2,500 per month without having
their benefits reduced. Once they reach age 65, benefits are no longer subject to any
"This is a significant increase over the 2001 monthly limit of $2,084 for these
workers," Sacks noted.
An "earnings test" for beneficiaries aged 65 through 69 was abolished by
legislation in 2000. Beneficiaries age 70 and older have not been subject to benefit
reductions based on earnings since 1983.
COLA Affects Many Benefits
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 earners account.
It also affects what are known as "transitional" benefits a special
calculation applicable to those who reach ages 81 to 85 in 2002. It also applies to
"special age 72" benefits, which are limited benefits paid to certain workers
born prior to 1900 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 program, according to Sacks.
About CCH INCORPORATED
CCH INCORPORATED, Riverwoods, Ill., is a leading
provider of Social Security, tax, pension and benefits law information for attorneys,
accountants and human resources professionals, including the 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 North America. The CCH web site can be accessed
at www.cch.com and the CCH Human Resources
group site is http://hr.cch.com.
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