10/28/11: For the first time since 2009, Social Security recipients will be receiving a long awaited cost of living increase. A benefit increase of 3.6% will begin in 2012 and for the individual who collects the average Social Security check of $1,082 it will increase by $38.95 per month or $467 a year. This improvement in monthly benefits will also be felt by Supplemental Security Income (SSI) recipients. All toll, approximately 60 million Americans will experience a much needed addition to their wallet.
The Social Security cost of living increase provision was originally put in place in 1972 through congressional legislation, but in 1975 Congress provided for annual COLAs based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics determines the CPI-W annually and since 2008 we have not had an increase in wages, hence a cost of living adjustment for Social Security.
Because of our 2011 increase in wages, we will also see an increase in the maximum amount of earnings that will be subject to taxation for Social Security from $106,800 to $110,100. At this time, there is no information about how Medicare may be changed for 2012 but according to the Social Security Administration, some beneficiaries may see their increase in Social Security benefit offset by Medicare premium increases.
Also, Social Security recipients do not have to do anything with the Social Security Administration to receive this increase. If you have any questions, feel free to call me at (205) 989-3498.
Greg Powell, CIMA