Social Security Announces 3.6 Percent Benefit Increase for 2012


Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase 3.6 percent in 2012. The increase in the cost-of-living adjustment (COLA) will be the program’s first in three years. There was no COLA in 2010 or 2011 because inflation was too low.

Nearly 55 million Social Security beneficiaries will get a 3.6 percent cost-of-living adjustment starting in January 2012. Increased payments to more than 8 million Supplemental Security Income beneficiaries will begin on December 30, 2011.

Social Security is also linked to Medicare. For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums. Information about Medicare changes for 2012, when announced, will be made available at

Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800. Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.

The Social Security COLA is based on a version of the U.S. Consumer Price Index tailored for people who work. It’s called the CPI for Urban Wage Earners and Clerical Workers, or the CPI-W. Every year, Social Security looks at the CPI-W average during the third quarter of the year, compares it with the average during the previous year’s third quarter, and designates any percentage increase as the following year’s COLA.

The Social Security Act provides for how the COLA is calculated.

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