Effects of Social Security benefit increase, December 1989.

by Joseph Bondar* Effective December 1989, Social Security beneficiaries received a 4.7 percent cost-of-living adjustment (COLA) in their benefit payments. This increase, which was reflected in the checks issued on January 3, 1990, was the highest since the June 1982 increase of 7.4 percent. The January benefit checks to 39.2 million Social Security beneficiaries totaled $934 million more than the amount paid in the previous month (table 1). The largest proportion of the benefit increase (74 percent) went to retired workers and their dependents; disabled workers and their dependents received 9 percent of the increase; and survivors received the remaining 17 percent. In 1988, 38.6 million Social Security beneficiaries received an additional $728 million in benefits as a result of a 4.0 percent COLA (chart 1). Benefit increases are initiated when the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third calendar quarter of a year exceeds the CPI for the base quarter by at least l/10 of 1 percent. The base is defined as either the third calendar quarter of the last year in which there was an automatic adjustment or any quarter in which a general benefit increase was effective. In