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Social Security up 1.7 percent

By Jennie L. Phipps · Bankrate.com
Tuesday, October 16, 2012
Posted: 9 am ET

Social Security recipients will get a 1.7 percent raise Jan. 1, Social Security announced Tuesday morning.

That's about four-tenths of a percentage point higher than the best-guess estimates had put it. That's still not a whopper of an increase, but for most people living in retirement, more is better than less. Because these increases are cumulative, it is also good retirement planning news for people a few years away from claiming.

Here's how the increase will affect various aspects of the program.

The maximum amount on which workers are taxed for Social Security will go from $110,100 to $113,700. There is no upper limit on the amount of income taxed for Medicare. Unless Congress renews the Temporary Payroll Tax Cut Continuation Act of 2011, which gave the payroll tax a 2 percent haircut, in 2013 taxes for employees will go back to 7.65 percent of income. Self-employed people pay both the worker and the employer share for a whopping total of 15.3 percent.

The amount you must earn to be credited with one quarter of Social Security coverage -- you need 40 quarters or 10 years of work  to qualify for retirement benefits -- will rise to $1,160.

The cost of living adjustment will drive up the average amount that Social Security recipients receive in 2013 to these levels:

  • All retired workers, $1,261.
  • Aged couple, both receiving benefits, $2,048.
  • Widowed mother and two children, $2,592.
  • Aged widow(er) alone, $1,214.
  • Disabled worker, spouse and one or more children, $1,919.
  • All disabled workers, $1,132.

The amount that a worker who has worked for 35 years, earning the maximum amount of Social Security every year, can receive at full retirement age -- 66 in 2013 -- is $2,533.

If you take Social Security before full retirement age -- between the ages of 62 and 65 -- there is a limit on the amount of payroll income you can earn without losing $1 of Social Security for every $2 of income. That cap rises in 2013 to $15,120 a year.

If you work the year you reach full retirement age, you can earn quite a bit more before switching over to Social Security. That maximum is $40,080. After that, $1 in benefits will be withheld for every $3 in earnings above the limit.

Social Security is a blessing for so many people -- especially at a time when an increasing number of retirees have no pension on which to rely.

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7 Comments
ELIZABETH HARRIS
November 22, 2012 at 8:36 am

YOU THINK YOU CAN LIVE ON SOCIAL SECURITY - YOU CAN'T NOT N THE
WORLD TODAY WITH PRICES SO HIGH. I CAN'T PAY RENT AND UTILITIES
AND HAVE MONEY FOR FOOD. LIFETIME EARNINGS ARE LOW FOR PEOPLE
85. SO MY $1237 PER MONTH IS NOT ENOUGH TO PAY BILLS AND FOOD.

Guess who
November 19, 2012 at 9:37 pm

MS Reyes....get your facts correct. The President does not have the authority to increase SS income by fiat--no..that is not a car. How about your looking up the facts of the matter concerning this topic.

Jerry
November 19, 2012 at 7:50 pm

I am sick of the screaming rich Re-pubs. That want to do away with social security, and medicare. They want the American tax payers,to pay for wars. There is plenty of the peoples money to pay for those! The elite, have stock in defense contractors. Why is it, that a Congressman, or a Senator, gets elected with a couple of hundred thousand in the bank. But come out of government, with millions? Can anyone explain that to me? But that is OK, the rich get richer off of wars. But have the people get help when they get old, or sick? The rich do not want that. They want just two classes of people, rich and poor. No more middle class, and God forbid them helping, or sharing, there wealth? Why should they, they lied and cheated mostly to get rich! Not all, but a good majority, did. The day will come when the rich, will get whats coming to them. God has a little fire waiting!

SUNRISE
October 25, 2012 at 1:56 pm

Law if you really wanted to, you could get a job to help aid in the cost Medicare. Working 10 hours a week at a minimum wage job may pay for it. You would still have time for your retirement. If you are of the Social Security age where you are not penalized.....heck you could work 40 hours a week. I think the last 5 years my raises have been LESS than Social Security. Instead of "Feel Sorry For Me" how about be proactive "How am I going to make the best of this". How about your cup half full versus half empty!

LAW
October 18, 2012 at 11:09 pm

NO! It was 2% and YES it is a fixed income and those who worked EARNED IT! Some day you MIGHT be on Social Security if it is still around and you'll be THANKFUL! BUT you are not getting the whole picture. Seniors who have worked and many their whole adult lives (try 30-40 years)have to pay Medicare out of pocket. On a fixed income (yes it is fixed)have difficulty with those payments because the payments go up every year! I know...I know YOU have to pay your health care out of pocket BUT YOU are young enough to get two or even three jobs to make up for it! Seniors ALREADY worked and lived in a time when jobs didn't always pay what they pay now. Wages for them back 30 years ago was much lower than today! Sorry Pauly I aint feeling your pain!

Pauly D
October 17, 2012 at 11:27 am

I'm tired of hearing the retired on social security always saying they are on a "fixed" income. Look you get cost of living raises most every year. Was it not 3.6% last year. I still work and my income and a lot of others has not even gone up the 3.6% in the last 5 years. You got a much better raise than I did and I work!

Maria Reyes
October 16, 2012 at 7:21 pm

I cant beleive the president is only going to rase 1.7 percent this year for social security. The economy is bad and every is very expensive, 1.7 percent is nothing to all the people in social security. The president is giving the american people a slap in the face with 1.7 percent..