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Gas Costs Drive Social Security Benefits Upward
(RIVERWOODS, ILL., October 24, 2000) - Social Security
beneficiaries in 2001 will see the largest increase in benefits in nearly a decade,
according to CCH INCORPORATED (CCH), a leading provider of pension, benefits and tax law
information and software. As a result of inflation, an increase of 3.5 percent will be
applied to this coming years benefits starting with December 2000 benefits which are
paid in January 2001.
The 3.5-percent cost-of-living adjustment, or COLA, will produce an estimated monthly
benefit of $845 for all retired workers in 2001, $29 a month more than in 2000. A typical
married couple, both receiving benefits, can expect to find $1,410 in their monthly
benefit checks in 2001, $47 more than the comparable 2000 benefit, while the average-aged
widow or widower will receive an average benefit of $811, an increase of $28. The maximum
benefit payable in 2001 will rise by $103 to $1,536.
Energy Costs Drive Increase
The COLA increase is the largest one in nine years, according to Avram Sacks, JD, CCH
Social Security analyst, who noted that higher prices at the gasoline pump were largely
"The large increase in the cost of living is primarily due to a 15.7-percent
increase in energy costs since last September, and the bulk of that increase arises from
the increased costs of gasoline, natural gas and electricity," said Sacks.
"Without the increased energy costs, the increase would have been the same as last
year, 2.4 percent."
Earnings Limits Also Rise
The amounts that certain Social Security beneficiaries can earn without having their
benefits reduced "Earnings 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 $10,680 in 2001, or $890
per month, without having their benefits reduced. This is an inflation-adjusted increase
of $600 annually over the 2000 limit.
A modified test applies to workers who reach age 65 in 2001. These individuals may earn
up to $25,000 per year or $2,084 per month in the months before their 65th
birthday without having their benefits reduced.
An "earnings test" for beneficiaries ages 65 through 69 was abolished by
legislation earlier this year. 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 (including children and widow(er)s) and to the maximum family
benefit 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 80 to 84 in 2001 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 program, according to Sacks.
About CCH INCORPORATED
CCH INCORPORATED, headquartered in Riverwoods, Ill.,
is a leading provider of Social Security, 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 healthcare
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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