Oct. 19, 2011 - After two years without a cost-of-living increase, Social Security will give senior citizens and others on Social Security a 3.6 percent increase in 2012. The SS monthly payment for the average retired worker will go from $1,186 in 2011 to $1,229 in 2012 – an increase of $43, according to the announcement Wednesday.
Most senior citizens, however, will have to wait until next week, when Medicare announces the cost of Medicare Part B for 2012, to determine their net income from the COLA boost.
The 3.6 percent COLA will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012. Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011.
Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800.
Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.
Information about Medicare changes for 2012, when announced, will be available at www.Medicare.gov.
For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums
Frequently Asked Questions (Answers by Social Security Administration)
What is a cost-of-living adjustment (COLA)?
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
Who determines the CPI-W?
The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. By law, it is the official measure used by the Social Security Administration to calculate COLAs.
Why is the 2012 COLA the first automatic increase since 2009?
There was no COLA in 2010 and 2011 because the CPI-W, as determined by the Bureau of Labor Statistics in the Department of Labor, for those years did not increase above the level of the third quarter of 2008, the last year a COLA was determined.
Will the maximum taxable earnings amount change in 2012?
Yes. Based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800.
Will the retirement earnings test exempt amounts change in 2012?
Yes. The earnings limit for workers who are younger than "full" retirement age (age 66 for people born in 1943 through 1954) will be $14,640. (We deduct $1 from benefits for each $2 earned over $14,640.)
The earnings limit for people turning 66 in 2012 will be $38,880. (We deduct $1 from benefits for each $3 earned over $38,880 until the month the worker turns age 66.) There is no limit on earnings for workers who are "full" retirement age or older for the entire year.
If Medicare premiums increase in 2012, how will that affect my Social Security benefits?
Information about Medicare changes for 2012, when announced, will be available at www.Medicare.gov. For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums.
How long has Social Security had COLAs?
Congress enacted the COLA provision as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975. Before that, benefits were increased only when Congress enacted special legislation.
###
No comments:
Post a Comment