Today the Social Security Administration announced the Cost of Living Adjustment (COLA) for 2013. Beginning in January 2013, Social Security beneficiaries will receive a 1.7% increase. Supplemental Security Income (SSI) benefits will go up by the same amount beginning on December 31, 2012.
To put this increase in perspective, the average recipient will see an increase of about $23 a month. Much of this increase, however, will likely be eroded by higher Medicare premiums, which are typically deducted from social security checks.
The COLA is calculated based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no increase in the CPI-W, as was the case in 2010 and 2011, then there is no COLA. Here are the increases by year since 2002:
In addition, the maximum amount of earnings subject to social security tax increased from $110,100 to $113,700. About 10 million taxpayers will pay higher taxes as a result.
You’ll find more details on the COLA at the Social Security Administration website.