Seniors: Social Security Benefits: Social Security Tax

The percentage of employee and employer annual tax contribution to the social security fund.
The percentage of employee and employer annual tax contribution to the social security fund.   

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Increasing Social Security Benefits
Published Tuesday, September 23rd, 2008

The amount of Social Security benefits will have a Cost-of-Living Adjustment in 2009 with a 5.8% increase, the biggest adjustment in 25 years. The average retiree will see an increase of $68 to $1153. With benefits increasing so does the Annual Retirement Earnings Test Exempt Amounts to $14,160 which amounts to $600 more a senior can earn after the Normal Retirement Age and still receive benefits before the Full Retirement Age (For baby boomers turning 62 in 2009, full retirement age is 66.)

The Office of Personnel Management states that the Retirement Rate of the population has increased from 3.5% in 2006 to 3.75% in 2008, the rolls of the beneficiaries of Social Security are surely increasing. Accordingly, one-third of all retirees live solely on their benefits from Social Security and the Employee Benefit Research Institute reports that 39% of retirees have stated that they will outlive their savings. With these increases, we are seeing the graying of the work force as more and more retirees are going back to work to make ends meet. The adjustment of the benefits, which those depending significantly on Social Security need, will increase the Social Security Taxes next year. Yet with five years till most of the baby boomers reach Full Retirement Age we must expect a steady increase in the Social Security Tax or at least up the taxable Income limit beyond the $106,800 set for 2009.

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U.S. Social Security Administration: Tax Rates -
Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program and Medicare's Hospital Insurance (HI) program are financed primarily by employment taxes.

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