It’s official: After back-to-back years of no cost-of-living adjustments, Social Security recipients will receive a 3.6% increase in benefits starting in January 2012. For the average retiree who received $1,177 per month this year, the increase will mean an extra $42 per month or a little more than $500 per year.
But bad news may not be far behind for some. If Medicare Part B premiums also rise in 2012, which is likely, the Social Security increase for some beneficiaries may be partially or completely offset by increases in Medicare premiums. An announcement on 2012 Medicare Part B premiums, which covers doctor visits and outpatient services, is expected soon.
The maximum amount of earnings subject to Social Security taxes will increase next year from the current $106,800 to $110,100 in 2012. Of the 161 million workers who pay Social Security taxes, only about 10 million earn enough to be affected by the increase in the taxable maximum.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The earnings test for workers who collect Social Security benefits before their full retirement age -- currently 66 for those born in 1943 through 1954 -- will increase by $480 to $14,640 in 2012. Workers lose $1 in benefits for every $2 they earn over the cap. There is a more generous earnings cap during the year a worker turns 66 and it disappears completely once a worker reaches full retirement age.
AARP, a major lobbying group for the elderly, welcomed the news and used it as an opportunity to speak out against proposed changes to Social Security in the name of deficit reduction.
“This first increase in three years will provide much-need relief to millions and underscore the importance of Social Security as the only guaranteed lifelong and inflation-adjusted source of retirement income for most Americans," said AARP Executive Vice President Nancy LeaMond.
-
Is Your Investment App Making You Trade Too Much?Investment app and website users are being warned to watch out for 'game-like' features that can encourage impulsive trading — and reduce long-term returns.
-
Are Investment Fees Putting Your Retirement at Risk?Sneaky investment fees may delay your retirement by four years if you're not careful. Here's how to spot and rein in those fees.
-
457 Plan Contribution Limits for 2025Retirement plans There are higher 457 plan contribution limits for state and local government workers in 2025 than in 2024.
-
Medicare Basics: 11 Things You Need to KnowMedicare There's Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare — and much more.
-
The Seven Worst Assets to Leave Your Kids or Grandkidsinheritance Leaving these assets to your loved ones may be more trouble than it’s worth. Here's how to avoid adding to their grief after you're gone.
-
SEP IRA Contribution Limits for 2024 and 2025SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $69,000 in 2024 and $70,000 in 2025..
-
Roth IRA Contribution Limits for 2024 and 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
SIMPLE IRA Contribution Limits for 2024 and 2025simple IRA The SIMPLE IRA contribution limit increased by $500 for 2025. Workers at small businesses can contribute up to $16,500 or $20,000 if 50 or over and $21,750 if 60-63.
-
457 Contribution Limits for 2024
retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
-
Roth 401(k) Contribution Limits for 2025retirement plans The Roth 401(k) contribution limit for 2024 is increasing, and workers who are 50 and older can save even more.
