Social Security to Increase 3.6% in 2012
by Karl on October 24, 2011[printfriendly]
Social Security checks will increase by 3.6% next January. This is the first increase since 2009. It will help about 55 million seniors on Social Security.
The average monthly Social Security check is $1,082 or about $13,000 a year. This means an increase of just under $39 per month.
This cost of living adjustment or COLA was started in 1973 to help keep pace with inflation. It is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Have a seat because this next part can get confusing. The law says that the average CPI-W for the third quarter of 2008 is the base for any COLA calculation. That number was 215.495.
The third quarter number for 2011 is 223.233. This is 3.6% greater than 215.495 so the COLA for 2012 is 3.6%.
You can share this at your next gathering and be the smartest in the room!
OK, now the bad news. Since there hasn’t been any COLA for the past two years, there hasn’t been any premium increase for higher earning senior’s Part B. But for next year, there will be.
In 2012, first time enrollees will pay $115.40 for Part B.
If you are an average senior already receiving Social Security, your Part B premium will increase $10.20. This means that your net COLA is reduced from 3.6% to 2.63%.
If you receive below average Social Security monthly payments of $500-$1,000, your net COLA is 2.04%.
President Obama’s Super Committee is looking to cut the COLA by using a different CPI number. This is projected to reduce the current COLA calculation by .3% and reduce Social Security and SSI payments.
Let’s hope that this doesn’t get passed!
Karl Kim is a Certified Financial Planner™, Certified in Long-Term Care, and the President of Retirement Planning Advisors, Inc. in La Mirada, CA. He is a Medi-Cal Specialist and has submitted over 1000 applications with a 99.9% success rate over the past 20 years. He can be reached at 714-994-0599.
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