Social Security Payments to increase 3.6 Percent in 2012

Elderly crowd - BSN

(Best Syndication News) - Social Security and Supplemental Security Income recipients will receive a 3.6 percent increase starting on December 30, 2011. The increase is to adjust for the cost-of-living. The last time the government increased for this was in 2009. The last two years there was no cost-of-living increase.

Additionally, wage earners will also be expected to pay more for the Social Security Tax. The taxable maximum was increased to $110,100, which previously was $106,800. The Social Security Administration estimates that around 10 million workers will pay higher taxes because of the increase in the maximum for the 2012 tax year.

While the increase could be helpful, the Social Security Administration said that for some recipients, the extra money would be offset in part or entirely by the increased cost for Medicare premiums. So even though the cost of living has increased, the money will probably be used to pay for Medicare.

The Cost of Living Adjustments (COLA) started in 1975 after the passage of the 1972 Social Security Amendments legislation. Prior to this, Congress would have to legislate specific legislation to increases each time there was a need for it.

COLA is calculated by using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If no increase is found in these reports between the third quarter of last year to the third quarter of the current year, the Social Security benefits do not increase.

By: Tom Madison

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