Advocates for the elderly said the small increase highlighted the need to revamp the cost — of — living adjustment to better reflect prices paid by retired people, including the money they spend on health care.
The Senior Citizens League said a study it has done showed that in eight spending areas, people over age 65 have lost 40 percent of their purchasing power since 2000. This finding reflects factors such as big increases for gasoline, home heating oil and prescription drugs.
Shannon Benton, the group's executive director, said it supports legislation that would base the adjustment on a special gauge of the Consumer Price Index, the most closely followed inflation barometer. It would be weighted to better reflect the goods and services that older people are buying.
David Sloane, director of government relations for AARP, which represents people 50 and older, said the cost — of — living adjustment is critical because so many depend on SocialSecurity for most of their retirement income.
''Just under one in three older Americans count on Social Security for nearly all of their income and almost two — thirds of beneficiaries count on SocialSecurity for at least half of their income,'' he said.
There are more than 115,000 Social Security recipients in North Dakota. They account for about 18 percent of the state's population, and collect a total of more than $103 million each month, Social Security spokesman Howard Kossover said.
Part of the Social Security increase will be eaten up by a rise in the cost of Medicare, the health care program that covers the elderly and disabled. The government said this month that Medicare premiums will rise 3.1 percent next year, which comes to $2.50 to $96.40 per month. That is the lowest Medicare premium increase in six years.
Next year's cost — of —- living increase will go to more than 54 million people. Nearly 50 million receive SocialSecurity benefits; the rest get Supplemental Security Income payments for the poor.
The average retired couple, both receiving SocialSecurity benefits, will see their monthly check go from $1,722 to $1,761, an increase of $39.
The standard SSI payment for an individual will go from $623 per month to $637.
The average monthly check for a disabled worker will go from $981 to $1,004.
The government said nearly 12 million wage earners will pay higher taxes next year because the maximum amount of Social Security earnings subject to the payroll tax will rise from $97,500 currently to $102,000. In all, an estimated 164 million workers will pay SocialSecurity taxes in 2008.
The Social Security Administration on Monday had a ceremony to highlight the opening wave of baby boomer retirements, a generation of 78 million people born from 1946 to 1964. The first of those boomers will turn 62 next year, making them eligible for SocialSecurity benefits. An estimated 10,000 people per day are becoming eligible for SocialSecurity benefits over the two decades, putting a severe strain on the pension program.
If no changes are made, the Social Security trust fund is projected to deplete its reserves in 2041 and will begin paying out more in benefits that it collects in payroll taxes in 2017. Medicare is facing even greater problems because of the rapidly rising cost of health care.
President Bush pledged to make changes to Social Security the top priority of his second term. But his plan to provide private accounts for younger workers went nowhere in Congress and Republicans and Democrats remain deadlocked.