Social Security Administration Announces Cost of Living Adjustment
A cost of living adjustment (COLA) of 1.7% has been announced for Social Security (SS) benefits in 2013. SS benefits will increase 1.7% beginning with December 2012 benefits (payable in January 2013). The COLA last year was 3.6.
You should also be aware of two additional changes, based on the increase in average wages, effective in January:
- The maximum amount of earnings subject to the SS portion of the FICA tax will increase to $113,700 (from $110,100).
- The earnings limit for workers younger than full retirement age will increase to $15,120 (from $14,640). The earnings limit for workers the year of full retirement age will increase to $40,080 (from $38,880).
COLA adjustments are made so that SS benefits keep pace with inflation and are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers. For more information on how the COLA adjustment is calculated visit the Social Security Administration website.
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The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation.