Wednesday, October 24, 2012

What to Expect from Social Security in 2013

In a few months time, fiscal year 2013 will start. In terms of good news, the Social Security Administration (SSA) has some big announcements for its members in the forthcoming year.

Accordingly, here are some changes that workers and recipients can expect from the agency next year:

Bigger monthly benefits

Recently, the agency announced that it will increase social security payments by 1.7 percent come 2013. Recipients will start receiving an increase in Cost-of-living Adjustment (COLA) by January next year, according to the agency’s official press release.

Higher taxes

Consequently, following the said increase in monthly payments, the maximum amount of total earnings subject to the social security tax or the so called taxable maximum will likewise increase. In fact, out of approximately 163 million workers who will pay social security taxes next year, nearly 10 million of whom will pay higher taxes as a result of the increase.

Payroll tax cut to expire

Under the current law, the temporary payroll tax cut will expire by the end of December this year. In 2013, workers will pay 2.6 percent of their income into the Social Security system in 2013. It is actually a 4.2 percent increase in 2012.

Increased earning limit

Accordingly, retirees who are currently working and collecting benefits at the same time will be able to earn $480.00 in time before their payments will be withheld next year.

Meanwhile, recipients who are younger than the full retirement age can collect up to $15,120.00, after which $1.00 of every $2.00 gained will be temporarily withheld from their monthly payments. For retirees who will turn 66 in 2013, their earning limit will be $40,080.00 in time, after which $1.00 of every $3.00 earned will be restrained.

When recipients turn their full retirement age, they can collect both or any amount without penalty and Social Security benefits at the same time. For recipients who are at their full retirement age, payments will be adjusted as well to reflect any benefits that were withheld and the continued earnings.

Maximum possible benefit increase

Wage earners who began collecting benefits at their full retirement age and receive $2,513.00 per month will be receiving $2,533.00 monthly in 2013.

No more paper checks

By March 1, 2013, the U.S. Treasury will stop sending paper checks to Social Security beneficiaries. All recipients will then receive their payments through a direct union account or loaded onto a Direct Express Debit MasterCard. Meanwhile, for recipients who do not prefer to receive their payments via electronic means, they will receive their payments through a pre-paid debit card. 

All the above-stated facts are actually announced previously by the agency through its official web page. However, the changes were scheduled to take effect by next year.

In this regard, a Los Angeles long term disability lawyer is giving some hints of what is more likely to expect from the social security agency next year to keep people aware, especially those who are not informed about the said changes.