The Social Security Administration announced that monthly Social Security and Supplemental Security Income (SSI) benefits will increase 3.6 percent in 2012. Called a Cost-of-Living Adjustment, or COLA for short, the 3.6% increase is the first raise in benfits since 2009.
About 55 million Social Security beneficiaries will see the increase beginning in January 2012. Another 8 million Americans will receive increases in SSI benefits as of December 31, 2011. Although the increase is good news for seniors, it’s a bit of a mixed blessing for two reasons.
First, medicare premiums are expected to rise, too. As SSA acknowledged, for some beneficiaries, “their Social Security increase may be partially or completely offset by increases in Medicare premiums.” Increases in medicare payments have not yet been announced. When the increases are released, they will be available at www.Medicare.gov
Second, the amount of income subject to the social security tax will also rise by about 3 percent. The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800. While this of course only affects folks making more than $106,800 a year, it results in a tax increase for about 10 million taxpayers.
So let’s talk turkey. What does 3.6% translate into for most seniors. According to CNN, the average monthly check will increase $43, to $1,229, while for the disabled, it will rise $39 to $1,111.
(Chart Source: CNN)