Reg Jones Expert's View

Like annual cost-of-living adjustments (COLAs) in federal retirement programs, Social Security increases are based on annual changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI/W). However, under Social Security eligible FERS retirees get the same increase as those who retired under CSRS, and at the same time. In 2009 that’s 5.8 percent. And you should have already received it in your January 2009 Social Security payment.


Full retirement age for Social Security benefits ranges between 65 and 67, depending on the year in which you were born. Although you can sign up for a Social Security benefit as early as 62, the earlier you begin receiving that benefit the smaller it will be. For example, if your full retirement age is 65 and you signed up for your Social Security benefit at age 62, the reduction is about 20 percent. If it’s 67, then the reduction will be around 30 percent.

If you are already receiving a Social Security benefit, but you continue working and are under full retirement age, your benefit may be reduced or eliminated. That’s because there’s a Social Security earnings limit. In 2009 the limit is $14,160. If you exceed that limit, your Social Security benefit will be reduced by $1 for every $2 you earn from wages or self-employment. That reduction continues until the year in which you reach your full retirement age. If you do that in 2009, the limit is $37, 680. Anything you earn above that amount will be reduced by $1 for every $3 you earn. Fortunately, the earnings limit no longer applies beginning with the month in which you reach your full retirement age.

Whether or not you are affected by the Social Security earnings limit while working, the contributions you make to the Social Security system through payroll deduction or self-employment will be credited to you and result in an increase in the Social Security benefit to which you will be entitled.

Oh, there’s another number to keep in mind, one that applies to those of you who haven’t retired and are still working. The Social Security maximum taxable wage base for 2009 is $106,800, an increase of $4,800 from 2008. If you earn more than that, your take-home pay will increase. That’s because Social Security taxes aren’t deducted beyond that point. However, Medicare taxes will still be deducted, no matter how much you earn.