Social Security Changes in 2012

Georgia Social Security Lawyers

Two Thousand and Twelve brought with it changes to the Social Security System. For the first time since 2009 recipients will see bigger payments among other things. There a five noticeable changes that will be affecting Social Security in 2012.

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1. The biggest and most noticeable change is a boost in monthly payments. Sixty million Americans will see an increase of 3.6 percent in their Social Security checks. For the typical retiree this will amount to $43 per month. A portion of the increase may be deducted for higher Medicare Part B premiums.

The boost in monthly payments is due to an increase in inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. Since 1975 Social Security payments have been automatically adjusted each year. For 2010 and 2010 there was zero percent increase in cost-of-living adjustments. The highest cost-of-living adjust came in 1980 with a 14.3 percent increase.

2. Another big change is a higher Social Security tax cap. The tax cap, or the maximum amount of earnings subject to Social Security taxes, has increased from $106,800 to $110,100. This means 10 million high earners will pay higher taxes a result of the higher taxable minimum.

3. The Social Security tax holiday has been temporarily extended. Currently workers are receiving a two percent payroll tax cut. This tax cut has been extended until the end of February of this year by the Temporary Payroll Tax Cut Continuation Act of 2011. This means that nearly 160 million workers will have 4.2 percent of their pay deposited into the Social Security trust fund. This is a decrease from the usual 6.2 percent that gets deposited.

This decrease will be in effect until February 29, 2012. Higher income employees who earn more than $18,350 in January and February 2012 will have to pay an additional two percent Social Security tax on the amount they earn between $18,350 and $110,100.

4. Early retirees who work and collect Social Security benefits will now see a higher earnings limit. These people can now earn $480 more next year before a portion of their Social Security benefits will be temporarily withheld. For Social Security recipients below the full retirement age (66 for those born between 1943 and 1954) can now earn up to $14,640 and anything over that amount will result in 50 cents of each dollar earned getting withheld from their Social Security payments.

For those retirees who turn 66 in 2012, the limit climbs to $38,880 and anything over which will result in 33 cents of each dollar earned being deducted from monthly payments. There will be no penalty for working and collecting Social Security benefits starting the month you turn your retirement age. When you turn of retirement age your benefit will also be adjusted to reflect your continued work record and any benefits that were withheld.

5. The maximum possible Social Security benefits a recipient can receive have increased from $2,366 to $2,513 per month. To be eligible for this amount a worker would need to earn $111,100 (the maximum taxable amount) every year after age 21.

The future for Social Security benefits is uncertain. For now recipients can look forward to receiving a larger check among other things.