Dear Editor:
A new year always brings changes. Many of those changes are small. Most people change their calendars and others change their wardrobe. But I want to remind everyone of big Social Security changes that go into effect this month that touch the lives of almost every American. All the changes are brought about by automatic annual adjustments for inflation that are required by law.
Here’s a rundown of the major changes.
The more than 50 million people who get Social Security and Supplemental Security Income payments get a 1.4 percent raise this month. That means, for example, the monthly benefit paid to the average retiree goes up from $882 to $895. And average benefits paid to a disabled worker with a spouse and child climb by $19 per month from $1,376 to $1,395. A widowed mother with two children whose husband had earned average wages will see her survivor benefits increase from $1,812 to $1,838 each month.
Working retirees who are under “full retirement age” can earn more money this year before losing any benefits. In 2003, anyone under age 65 and two months will lose $1 in benefits for every $2 earned over $11,520. Last year, the penalties kicked in for anyone under age 65 earning more than $11,280 annually. The reduction remains the same: $1 dollar deducted from Social Security check for each $2 earned over the threshold.
People who want to work and get off of Social Security disability benefits also get a break. After a nine-month “trial work period” with unlimited earnings potential, disability benefits usually will be stopped if earnings exceed $800 per month in 2003. Last year, the cutoff point was $780.
Some people who are working might notice other Social Security changes. Those earning more than $84,900 will pay more in Social Security taxes in 2003. That was the cutoff point for payroll deductions last year. But in 2003, employers will continue to withhold the 6.2 percent Social Security tax up to an $87,000 wage base. Self-employed people pay Social Security taxes on 12.4 percent of their net profit, up to the same $87,000 limit this year. Medicare tax withholding remains the same. Employers pay 1.45 percent on all their earnings, and self-employed people pay 2.9 percent on their entire net profit.
Even fewer workers will notice one other inflationary change. Social Security gives people the maximum four “credits” that count towards future Social Security benefits after they earn $3,560 in 2003. Last year, four credits were assigned after only $3,480 in earnings. Most people need 40 credits, or 10 years of work, to be “vested” in the Social Security system.
For more information on these and other changes, I suggest you visit our website, www.socialsecurity.gov. A link on the homepage connects you to all the updates.
Yvonne Bryant
Social Security Manager in Jersey City