[Updated October 19 – Official 2012 COLA Increase is 3.6%] The Social Security Administration (SSA) announced that the Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase by 3.6 percent in 2012. The 2012 COLA increase would be the first in two years, reflecting a rise in inflation.
The 3.6 percent cost-of-living adjustment (CO LA) will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012. Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011. Monthly Social Security payments average $1,082, or about $13,000 a year.
Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800. Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.
Source : SSA
[Previous update] A 2012 COLA (cost-of-living adjustment) boost for social security, SSI and federal benefit recipients is looking more and more likely, with a 3.5 percent rise being predicted for next year. Other groups such as government retirees and certain Medicare plans whose pay/benefits are tied to COLA will also see a change. The 2012 COLA increase would be the first in two years and is a much needed boost for over 60 million Americans.
The COLA is determined each year by the increase, if any, in the third-quarter CPI over the index level a year earlier. The 3.5 percent estimate is based on July and August CPI numbers, which have been a very accurate gauge of the likely COLA increase. Final calculations can only be made when September data is released on October 19. Eligible recipients will receive the cost-of-living adjustment in December, unless Congress takes action to block the increase (because it increases our national debt).
Other Key Impacts
SSI recipients who were expecting another one-time bonus payment of $250 in 2011-2012 will likely not see one if COLA rises by as much as forecast. Instead the 3.5% COLA increase will result in an additional $200 to $400 annual increase for SSI recipients. The COLA increase would also trigger the first increase in three years for Part B Medi
care premiums, drawn from SSI payments, to cover hospitals plus physician and outpatient expenses. Premiums had been frozen at $96.40 a month for about 75 percent of beneficiaries over the last two years when COLA did not increase. It would increase to $99.75 if the projected COLA increase materializes
COLA for the Federal Employees Compensation Act (FECA), which is applicable only in cases where death or disability occurred more than one year prior to the adjustment’s effective date, is projected to be slightly higher at 3.7%. The 2012 FECA COLA will be based on the increase in the CPI between December 2010 and December 2011.