In case you haven’t heard, Social Security announced a 3.6% increase in benefits for 2012 to account for inflation. This cost of living adjustment will affect 60 million Americans and is the first adjustment in two years due to low inflation.
While some are grateful for the increase in this tough economy, many others feel it’s not enough. “Despite the absence of a Social Security COLA, over the last two years out-of-pocket health care costs rose 14.1 percent for seniors and people with disabilities, effectively reducing the value of Social Security benefits,” said Nancy Altman, co-chair of the Strengthen Social Security Campaign in the Associated Press. Some of the increase will also be lost to an impending hike in Medicare costs, which are deducted directly from Social Security payments.
Another change that will take effect will increase the maximum amount of earnings subject to Social Security tax. The maximum taxable income will change from $110,100 to $106,800. The Social Security Administration states that this change is due to increased average wages. About 10 million Americans will pay higher taxes due to this increase.