The Social Security announced changes for 2012 that will affect Social Security beneficiaries and retired persons receiving a retirement income. Millions of beneficiaries will notice the changes by New Years Eve.
3.6% Benefit Increase in 2012
The Social Security Administration has implemented a 3.6% increase for beneficiaries receiving social security and SSI benefits . The increase reflects an increase in COLA (cost of living). The COLA increase is the first positive increase since 2009.
Beneficiaries who receive their benefits on the first of the month will see the increase in their benefit payments on the last day in December 2011. January 1st, 2012 is a holiday, so the benefits will be paid on the last day in December 2011. The increase is welcomed by the beneficiaries dependent on their fixed income and have been affected by the cost of daily living increasing while their benefits remain unchanged.
What is COLA?
COLA is the cost of maintaining your standard of daily living. The purpose of a COLA increase is to ensure recipients aren’t strapped by inflation. If it is more expensive to live the same way, but your income does not increase, people aren’t able to spend money and live as they are used to and budgeted for. Their purchasing power becomes nonexistent.
Citizens aren’t able to put money back into the economy and help promote growth. Their benefits are depleted by not adjusting for the increase in groceries and utilities and not receiving a higher income. We have not seen an increase since 2009 because the country did not see an increase in wage earners income. If there is no wage increase to the Urban Wage Earners and Clerical Workers or CPI-W there can be no COLA.
Changes to Retirement Income
The Social Security Administration announced a plan that will affect a small group of citizens receiving a retirement income. The new 2012 adjustments will result in a change to the maximum amount of income earned by retirees subject to a social security tax. People with a retirement income will notice a change from $106,800 to $110,100. The taxable income increase will only affect a 10 million workers in the US. This increase is based on the increase in average wages.
When the average wage increases, the maximum earning for retirees is increased as well. Retirees expecting to remain tax exempt fall into 2 categories. People reaching NRA, or Normal Retirement Age, after 2012 are subject to an earning cap of $14,640.00. People at “full” retirement age (NRA) in 2012 will notice an earrings cap of $38,880.00.
If you are in need of more assistance regarding the 2012 Social Security changes, visit Socialsecurity.gov. Their site provides useful links and answers to frequently asked questions from concerned citizens like you. If you provide your e-mail address, you can sign up to receive updates about Social Security changes. Your local Social Security office also provides useful resources and personnel to address your concerns. Here’s a handy resource to find the closest Social Security office location.