Social Security Benefits Will Rise 5.4% in 1991

The nation’s 40 million Social Security recipients will see their benefit checks increase by 5.4% starting in January, the biggest advance in 8 1/2 years, the government said today.

That increase will translate into an extra $31 per month for the average retired worker, whose monthly check will increase from $571 to $602.

The maximum monthly benefit for a worker retiring in 1991 at age 65 will rise by $47, to $1,022.

Since 1975, benefits have risen automatically each year, keeping pace with the annual inflation rate with the exception of six months in 1983 that were skipped to help bail the Social Security system out of a crisis.

The exact size of the 1991 increase became official today when the Labor Department announced September’s 0.8% increase in the Consumer Price Index, the inflation measure used to determine cost-of-living increases for the Social Security program.

The 5.4% increase, which will show up in the Jan. 3 benefit checks, followed a 4.7% increase that took effect last January and a 4% increase in 1989.

It was the largest increase since a 7.4% jump in July, 1982, when high inflation rates translated into bigger cost-of-living increases.

The 5.4% increase in 1991 also applies to the nation’s 4.5 million recipients of Supplemental Security Income, which provides a minimum income floor for poor people who are aged, blind or disabled.

The maximum federal SSI payment will rise by $21, to $407 per month, for an individual and by $31, to $610, for a couple.

The government also said today that the maximum wage subject to the payroll tax that finances Social Security benefits will climb from $51,300 to $53,400 next year.

That change will boost taxes for about 10 million higher-income workers who earn above the current wage cap.

The tax rate of 7.65%, which finances both the Social Security and Medicare programs, would remain unchanged next year.