Effects of Social Security benefit increase, December 1989

• Published in: Social security bulletin Vol. 53; no. 4; pp. 14 - 18
• Main Author: Bondar, J
• Format: Journal Article Magazine Article
• Language: English
• Published: United States Social Security Administration 01.04.1990; Superintendent of Documents
• Subjects: Beneficiaries; Cost of living; Cost of living adjustments; Increases; Old age benefits; Prices and rates; Social security; Social Security - economics; Statistical data; United States; United States; United States > US
• ISSN: 0037-7910; 1937-4666

Effective December 1989, Social Security beneficiaries received a 4.7% cost-of-living adjustment (COLA) in their benefit payments. This increase was the highest since the June 1982 increase of 7.4%. Social Security benefits are based on a worker's primary insurance amount (PIA). The PIA is based on the individual's covered earnings averaged over the working lifetime. The PIAs for workers who attained age 62, became disabled, or died before 1979 are computed from the average monthly wage, based on the individuals' actual earnings or self-employment income. The 1977 Social Security Amendments introduced wage indexing. This method is applicable to workers first eligible in 1979 or later and requires that earnings be indexed to reflect changes in average wage levels in the economy before the averaging of earnings takes place. In addition to the COLA, which is indexed to rises in the Consumer Price Index, other items are adjusted to reflect increased wages. These include the contribution and benefit base and the bend points used in the benefit formula.