SSA Q& A

Question 13

Question: “What are the Social Security cost-of-living changes for 2006?”

Answer: A Social Security cost-of-living (COLA) increase of 4.1% for 2006 was announced on October 14, 2005. Following are the changes effective January 1, 2006:

2006 SOCIAL SECURITY CHANGES
Cost-of-Living Adjustment (COLA):

Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2004 through the third quarter of 2005, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 4.1 percent COLA for 2006. Other important 2006 Social Security information is as follows:

Tax Rate
Employee	7.65%	7.65%
Self Employed	15.30%	15.30%
NOTE: The 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion (OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see below). The Medicare portion (HI) is 1.45% on all earnings.
Maximum Earnings Taxable:	2005	2006
Social Security (OASDI only)	$90,000	$94,200
Medicare (HI only)	No Limit
Quarter of Coverage:	2005	2006
Earnings required	$920	$970
Retirement Earnings Test Exempt Amounts:	2005	2006
Under full retirement age NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit.	$12,000/yr. ($1,000/mo.)	$12,480/yr. ($1,040/mo.)
Year individual reaches full retirement age NOTE: Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit.	$31,800/yr. ($2,650/mo.)	$33,240/yr. ($2,770/mo.)
There is no limit on earnings beginning the month an individual attains full retirement age (65 and 6 months for those born in 1940; 65 and 8 months for those born in 1941).
Social Security Disability Thresholds	2005	2006
Substantial Gainful Activity (SGA)
Non-Blind	$830/mo.	$860/mo
Blind	$1,380/mo.	$1,450/mo.
Trial Work Period (TWP)	$590/mo.	$620/mo.
Maximum Social Security Benefit: Worker Retiring at Full Retirement Age in	2005	2006
NOTE: For retirees born in 1940, full retirement age is 65 and 6 months; for those born in 1941, it is 65 and 8 months. Full retirement age will gradually increase to age 67 for those born in 1960 or later.	$1,939/mo. (Age 65 and 6 months)	$2,053/mo. (Age 65 and 8 months)
SSI Federal Payment Standard:	2005	2006
Individual	$579/mo.	$603/mo.
Couple	$869/mo	$904/mo
SSI Resources Limits:	2005	2006
Individual	$2,000	$2,000
Couple	$3,000	$3,000
SSI Student Exclusion Limits:	2005	2006
Monthly Limit	$1,410	$1,460
Annual Limit	$5,670	$5,910
Estimated Average Monthly Social Security Benefits Payable in January 2006:	Before 4.1% COLA	After 4.1% COLA
All Retired Workers	$963	$1,002
Aged Couple, Both Receiving Benefits	$1,583	$1,648
Widowed Mother and Two Children	$1,992	$2,074
Aged Widow(er) Alone	$929	$967
Disabled Worker, Spouse and One or More Children	$1,509	$1,571
All Disabled Workers	$902	$939