If you aren't already receiving Social Security checks each month, you may want to bypass this week's column. If you are receiving such payments or will be in the near future, or simply want to know what's going on and what it may mean for you in the future, then read on.  But, I caution you, it may get depressing.

Starting in January of next year, some 47 million Americans will see a 2.7 percent increase in their Social Security checks, which translates to about $25 per month more on average. Not exactly the start of an empire but although it's better than nothing, consider that at the same time a lot of that increase will be offset by higher Medicare premiums.

Incidentally, this most recent increase is actually the largest since benefits rose by a nice 3.5 percent in 2001. And this year, we saw only a 2.1 percent increase.

Now, looking at something called COLA, which means the annual cost of living adjustment, we find that this is based on the government's July-September quarter last year via the Consumer Price Index through the third quarter of this year. Therefore, the $25 will actually mean that the monthly check for the average Social Security retiree will go up from $930 in 2004 to $955 in 2005. However, I said that Medicare would eat up a lot of that. It will, simply because the government recently announced that monthly Medicare premiums for doctor visits are due to increase by $11.60 a month in 2005, which is a record in dollar terms.

However, keep one thing in mind. Under the law, no Social Security beneficiary will receive lower benefits than that person is presently receiving even if the Social Security cost-of-living adjustment does not cover the entire cost of the Medicare premium increase. Of course, one questions what happens with those who are at the low end of the benefit scale and who will probably see no gain at all this year simply because the increase will be devoured by the Medicare premium increase.

The bottom line is that the 2.7 percent increase will mean that the average retired couple will probably see their benefits go up from $1,532 a month to $1,574. Now we're talking about a gain of $42 per month.

You might want to note that almost 10 million workers will have to pay higher payroll taxes in 2005 because the maximum amount of Social Security earnings subject to payroll tax will increase from $87,900 to $90,000. Actually, some 159 million workers will be paying Social Security taxes next year.

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