Benefits for Retirees to Rise Slim 1.3% : $6 Average Social Security Hike Least Since Link to Index

WASHINGTON â€”  The nation’s 37.4 million Social Security beneficiaries will get a 1.3% benefit increase in January that will put an extra $6 in the average retired worker’s monthly check, the government said today.

It is by far the smallest annual increase since benefits were tied to the consumer price index 11 years ago and became official with the Labor Department’s release of the consumer price index for September.

The Social Security increase matches the inflation rate from the third quarter of 1985 to the third quarter of this year.

Health and Human Services Secretary Otis R. Bowen said the increase will appear in the checks that Social Security beneficiaries receive on Jan. 2, and also in the checks that 3.8 million Supplemental Security Income welfare recipients get on Dec. 31.

Increase to $488

It means that the average Social Security pension for retired workers will climb from $482 to $488 a month.

The average elderly couple who are both drawing Social Security will get an $11 increase, from $822 to $833 a month.

And the maximum Social Security benefit for someone retiring in 1986 at age 65 will climb by $9, from $760 to $769.

It is the fourth straight year that the benefit hike has been at an all-time low. The benefits went up 3.5% for both 1983 and 1984, and 3.1% for 1985. The peak year was 1980, when benefits soared 14.3%.

Social Security beneficiaries would have received no hike for 1986 had not Congress and President Reagan scrapped a trigger in the law that barred any benefit increase if inflation fell below 3%.

Payroll Tax Increases

When benefits go up, so does the maximum amount of wages subject to the Social Security payroll tax. The government will levy the 7.15% payroll tax on earnings up to $43,800 in 1987, up from this year’s $42,000 cutoff.

The maximum tax on an individual worker will be $3,131.70. That is $128.70, or 4.29%, more than this year’s top tax. Employers must pay the same amount.

The Labor Department reported today that consumer prices climbed 0.3% last month, with a 2.5% rise in gasoline costs accounting for most of the increase.

(Consumer prices in Los Angeles and Orange counties, fueled by higher housing prices, posted their steepest gain in more than 4 1/2 years last month--1.1% in each case.)

The nationwide 0.3% gain followed a 0.2% increase in August. Through last month, prices this year have increased at an annual rate of just 0.6%.

Analysts predict retail costs will be up about 2% for the full year, far less than the 3.8% increase for all of 1985.

Energy prices overall rose 0.7% last month. The gasoline price hike followed a 4.7% dip in August.

Analysts, however, say they see little evidence that energy costs will rise much more through the end of the year.