In the year of 2013, some changes are coming to the Social Security program. Some of these changes will be significant, others will be small. Overall, you're expected to pay in more, but your benefits will also increase. These changes reflect a higher cost of living and the economic reallities Americans face right now.
Monthly Payments Will Increase
Social Security payments are going to see a 1.7 percent increase. While this is nice, it will be considerably less than the increase given in 2012 to retired persons. The cost of living adjustments given to people on Social Security are determined by measuring inflation reflected according to the Consumer Price Index for Urban Wage Earners and Clerical Workers. The typical Social Security recipient will see a $21 increase in his or her monthly check.
No More Payroll Tax Cuts
In the year of 2013, workers are going to be required to pay 6.2 percent of what they earn into the Social Security system. This is a jump up from the 4.2 percent that people have paid in 2012. The reason this is going to happen is because payroll tax cuts are going to expire at the end of this year.
Social Security Tax Caps Will Increase
In 2013, $113,700 is going to be the maximum amount of earnings you'll have to pay into Social Security taxes. In 2012, the maximum was $110,100. Due to this increase, the government estimates that ten million people will pay higher taxes.
Limits for Earning Are Going to Increase
Retired individuals who decide to work and collect Social Security benefits simultaneously will be able to earn $480 more than the previous year before any benefits would be withheld from their monthly checks. Individuals who were born between 1943 and 1954 can earn up to a maximum of $15,120. If these individuals earn past that amount, then one out of every two dollars earned will be taken from their monthly Social Security checks.
Those who will be turning 66 in 2013 can earn up to a maximum of $40,080. If people in this group earn over this amount, then one out of every three dollars is going to be withheld. Once they reach full retirement age, recipients can earn as much as they want and receive all of their benefits. If any earnings were withheld, the checks will be adjusted to show this was the case when they reach full retirement age.
The Maximum Amount of Benefits One Can Receive Will Grow
In the year of 2013, when a worker reaches his or her full retirement age, he or she can collect a maximum of $2,533 per month. In 2012, the amount was $2,513.
Getting Rid of Paper Checks
On March 1, 2013, all who are receiving paper checks from the U.S. Treasury will not receive them any longer. Payments from that point forward are going to be electronic. Payments either will be direct-deposited into a bank account or loaded on prepaid debit cards. Social Security recipients who have not chosen an electronic payment method by the cutoff date will receive Social Security payments on prepaid debit cards. Most recipients already do receive their payments electronically, and those who have signed up for Social Security from 2011 on have been required to select an option for electronic payment.
Jessica Bosari is a freelance writer and blogger for various publications and her own blog. You can read more of Jessica's work here. If you have any comments or questions about SavingTools.com or about saving money, leave your comments in the form below or email firstname.lastname@example.org. Thanks!