Social Security payout to rise 1.4 percent
By Neil Irwin
Washington Post
WASHINGTON — Social Security benefits and most federal pensions will rise 1.4 percent in January based on government figures released yesterday that show extremely low inflation during the past year.
The consumer price index, a broad measure of inflation, rose 0.2 percent last month and 1.5 percent in the 12 months that ended Sept. 30, the Labor Department said yesterday. The September consumer price data are used in calculating annual cost-of-living adjustments for a variety of government benefits, as well as increases in Medicare premiums and deductibles that participants in the program pay.
The 1.4 percent rise affects the 46 million Americans who receive Social Security benefits and 7 million poor elderly people who receive Supplemental Security incomes.
The average monthly Social Security benefit will increase in January to $895 from $882. Average monthly benefits for retired couples, both of whom receive payments, will increase to $1,483 from $1,463. Average benefits for a widowed mother with two children will increase to $1,838 from $1,812.
Virtually all federal retirees and surviving spouses will receive similar increases to their pension benefits beginning in January, according to the Office of Personnel Management. Those covered by both the Civil Service Retirement System and the newer Federal Employees Retirement System will receive a 1.4 percent benefit increase, raising the average monthly payment to $1,945 from $1,918 (when inflation is higher, the two programs often have different cost-of-living adjustments). Military and foreign service pension plans will also receive 1.4 percent adjustments.
"Today's news tells us that inflation continues to be low, which is certainly good news for the elderly and disabled," said Social Security Commissioner Jo Anne Barnhart in a statement."
The cost-of-living adjustment is the lowest since 1999. Social Security cost-of-living adjustments were 2.6 percent at the beginning of this year and 3.5 percent in the beginning of 2001. The adjustment was calculated by comparing average prices during the July-to-September period of 2002 with prices during the same quarter of 2001.
A different formula is used for calculating increases in Medicare premiums and deductibles, causing them to rise more sharply in January.
Under Medicare Part A, which pays for, among other forms of care, hospital stays, the beneficiaries will pay a deductible of $840 in 2003, up 3.5 percent from $812 this year. Under Medicare Part B, which covers doctors' office visits and outpatient hospital services, the monthly premium will be $58.70, up 8.7 percent from $54 this year. More than 40 million Americans participate in Medicare.
The AARP, which represents senior citizens, noted that for many seniors the Medicare hikes will eat up most of their Social Security benefit increases.
"The Social Security COLA announced today is small — 1.4 percent — but it is certainly better news than we've been hearing about stocks, mutual funds, and 401(k)s," said AARP Executive Director William Novelli. "The news about higher Medicare premiums is troubling, however. Beneficiaries will be paying more than ever but still will not get any help with skyrocketing prescription-drug costs."
Social Security also announced that for working Americans, the maximum annual earnings subject to Social Security taxes next year will rise to $87,000 from $84,900.
This change will affect about 9.7 million of the 155 million workers paying Social Security taxes.
