Social Security retirement benefits for nearly 55 million people will rise 3.6% in 2012, the first cost of living increase since 2009 said the U.S. Social Security Administration on Wednesday.
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.
“Over the past two years, costs for food, utilities and health care have continued to increase while Social Security benefits have not,” said Nancy LeaMond, AARP Executive Vice President. “This first increase in three years will provide much-needed relief to millions, and underscores the importance of Social Security as the only guaranteed, lifelong, and inflation-adjusted source of retirement income for most Americans.”
Monthly Social Security payments average $1,082, or about $13,000 a year. A 3.5 percent increase would amount to an additional $38 a month, or about $455 a year.
Most retirees rely on Social Security for a majority of their income, according to the Social Security Administration. Many rely on it for more than 90 percent of their income.
Written by John Yedinak