COLA: 1.7% Benefit Increase for 2013 - Social Security
- Publish Date: 2012/10/16
- Author: U.S Department of Social Security
Outline: The 1.7% COLA will begin with increased payments to SSI beneficiaries will begin on December 31 2012.
Main DigestMonthly Social Security and Supplemental Security Income (SSI) benefits for nearly 62 million Americans will increase 1.7 percent in 2013, the Social Security Administration announced today.
Cost of Living Adjustment (COLA) - U.S. Social Security and Supplemental Security Income (SSI) benefits are adjusted to reflect the increase, if any, in the cost of living as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) prepared by the Bureau of Labor Statistics (BLS). The purpose of the cost-of-living adjustment (COLA) is to ensure that the purchasing power of Social Security and SSI benefits is not eroded by inflation. For purposes of determining the COLA, the average CPI-W for the third calendar quarter of the last year a COLA was determined is compared to the average CPI-W for the third calendar quarter of the current year. The resulting percentage increase, if any, represents the percentage that will be used to increase Social Security benefits beginning for December of the current year. SSI benefits increase by the same percentage the following month (January). If the increase in the CPI-W is at least one-tenth of one percent (0.1 percent), there will be a COLA. However, if the CPI-W increases by less than 0.05 percent, or if the CPI-W decreases, there will not be a COLA.
The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 56 million Social Security beneficiaries receive in January 2013.
Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2012.
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 $113,700 from $110,100.
Of the estimated 163 million workers who will pay Social Security taxes in 2013, nearly 10 million will pay higher taxes as a result of the increase in the taxable maximum.
Information about Medicare changes for 2013, when announced, will be available at www.Medicare.gov
For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums.
The Social Security Act provides for how the COLA is calculated. To read more, please visit www.socialsecurity.gov/cola