Moderately good news was announced recently for retirees who are already receiving their Social Security benefits. Your Social Security benefits are expected to increase by about 1.7% beginning in January, 2013. If you are working and receiving Social Security benefits at the same time, the size of your check should increase even more than this because of the increased premiums you have been paying into the system during the past year.
The 1.7% increase is not as much as the 3.6% cost of living adjustment that was received in 2012. However, since Social Security recipients did not receive any cost of living increase in either 2010 or 2011, it is helpful to be getting any increase at all this coming year.
There are other changes to Social Security that we can expect in 2013 that will affect both those who are working and paying into the system, as well as those who are already retired.
Other Social Security Changes in 2013
Unless the government takes steps to change it, the temporary payroll tax cut will expire at the end of this year, meaning that workers will once again return to paying 6.2 % of their income for Social Security, rather than the 4.2 percent that we have been paying for the past couple of years. For many workers, this will mean a substantial decrease in the amount of their take-home pay.
Another change will affect people who are retired and collecting Social Security benefits but who are younger than their full retirement age (approximately about age 66). If they are still working and collecting their reduced Social Security benefits at the same time, they will be able to earn $480 more next year before their Social Security benefits are reduced. In other words, they can earn $15,120 rather than the current amount of $14,640 before their benefits are reduced. Once retirees reach full retirement age, they can work, earn as much money as they want, and receive their full benefits without a penalty.
Another change that will benefit some retirees is that the maximum possible monthly benefit for someone who waits until their full retirement age to collect their Social Security benefits will increase to $2,533 a month.
Finally, everyone needs to be aware that, as of March 1, 2013, the Social Security Administration will no longer mail out paper checks. Instead, beneficiaries can choose to either have their payments deposited directly into a bank account, or their funds will be loaded onto a Direct Express Debit MasterCard. Doing away with paper checks will save the government money and provide a safer way for people to receive their benefits.
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Photo of old Social Security card is courtesy of www.en.wikipedia.org/commons