6 Imminent Changes to Social Security
A massive restructuring of the Social Security system is set to occur at the start of the new year. According to the Social Security Administration, 2013 will be a different time for recipients and wage earners alike.
There's some good news, particularly for retirees. But younger generations may not be so happy to hear what's in store.
Here's a rundown of six major changes to go into effect next year, courtesy of Yahoo News.
1. Monthly Checks Get Bigger
As with every year, Social Security checks will be adjusted for inflation, measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. In 2013, the payments will go up by 1.7%.
Of course, this year the cost of living adjustment was 3.6%. So maybe next year's increase isn't all that much to brag about.
Still, small victories are important. The average individual check will rise $21, from $1,240 to $1,261. For couples, the average payment will increase from $2,014 to $2,048.
2. End of Payroll Tax Cuts
As expected, we have to take the bad with the good. Payroll tax cuts end in December, so workers will have to start paying 6.2% of their income to social security rather than the previous 4.2%.
3. Tax Cap Increase
Social Security taxes will increase for some Americans—roughly 10 million Americans, to be exact.
The maximum amount of taxable earnings are set to increase to $113,700 from this year's $110,100, affecting an extraordinary number of wage earners.
4. Earnings Limit Increase
This is another win for retirees. If you are working and receiving Social Security benefits before the full retirement age, the amount in wages you can receive without having Social Security benefits withheld will increase by $480.
Social Security recipients will be able to earn up to $15,210 before $1 of every $2 is withheld from Social Security payments.
Retirees who turn 66 next year can earn up to $40,080 before $1 of every $3 is withheld. And once you reach your full retirement age, you can earn any amount without penalty.
5. Increase in Maximum Benefit
If a worker begins collecting Social Security at his or her full retirement age, maximum monthly payments will be $2,533 rather than this year's $2,513.
The U.S. Treasury has been making the move to go paperless since 2011, when it began requiring new recipients to go electronic.
Now, starting March 1, 2013, paper checks will halt completely. Current recipients must choose between a direct deposit option and a Direct Express Debit MasterCard. Any retiree who doesn't sign up for direct deposit by the deadline will automatically start receiving payments loaded onto the debit card.+8
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