The Social Security Administration (SSA) released its cost-of-living adjustments (COLA) on Tuesday , and with it announced the increase in payouts that will start in January. The increase amounts to a 2.7% jump for over 47 million recipients. This was largest increase since 2001, which saw a 3.5% jump in benefits. For 2004, the increase was 2.1%.
SSA calculated the COLA based on the Consumer Price Index from the third quarter of last year through the third quarter of this year. The average monthly check will now be $955, up from $930. On the other hand, approximately 9.9 million workers will now pay higher payroll taxes in 2005 because the maximum amount of earning subject to Social Security payroll taxes will increase from $87,900 to $90,000. An estimated 159 million Americans will pay Social Security taxes in 2005, according to the AP.
With the alteration of the COLA, Supplemental Security Income (SSI) payouts, which go to the poor, will increase from $564 to $579 per month on average for an individual. The average Social Security payout for disabled people will increase to $895 from $871 per month next year.
Social Security checks have been adjusted annually since 1975 to protect retirement benefits from inflation. The largest one-year increase since then has been 14.3% in 1980, when double-digit inflation held sway.