Three Reasons to Switch to Your Own Social Security Q: I am about to turn 70, and I'm still working. When I was 66, I filed for widow's benefits on my husband's record. At the time, my own retirement benefit was less than my husband's rate. My plan was to let mine build up over time, hoping that by …Read more. More Mailbox Miscellany Last week, I was cleaning out my email inbox and answered lots of miscellaneous questions in one column. Today, I'll dig even farther down in that mailbag and, once again, squeeze in as many questions and answers as my column space will permit. Q: I …Read more. Mailbag Miscellany This week, instead of concentrating on just one topic, I'm going to dig into my mailbag and answer random questions. I will try to keep my answers short and sweet so I can squeeze in as many questions as my column space will permit. Q: I took widow'…Read more. Maximizing Strategies: Going, Going, Gone! Congress and the president finally listened to me. With the budget bill agreement they reached a week or so ago, they killed the so-called Social Security maximizing strategies. And I say: good riddance! We will finally be getting Social Security …Read more.more articles
Social Security Update for 2013
It has been my custom for most of the past 15 years to write a year-end column that summarizes the Social Security changes and updates scheduled to take place the following year.
Almost all Social Security beneficiaries are familiar with the most popular and publicized upcoming change: the increase in monthly benefit checks for 2013 due to the automated cost-of-living adjustment, or COLA. In fact, Social Security recipients have probably already received a notice from the Social Security Administration telling them of the expected increase.
All Social Security checks are going up 1.7 percent in 2013. The COLA is based on something called the Consumer Price Index for Urban Wage Earners and Clerical Workers. This is the official measuring stick SSA has used to determine COLAs for the past 40 years. If you want to learn more about this measure, check out the website of the folks who maintain it: the Bureau of Labor Statistics. You'll find them at www.bls.gov.
I always dread mentioning COLAs in this column because every single time I do, I am flooded with emails from readers complaining that the increase is not enough. (Curiously, not once in 15 years has anyone ever written to me to say that their COLA increase was too high!)
Yet here's the rub: many economists and social planners believe Social Security COLAs are too generous! (I've explained why in past columns, but don't have the space to get into that argument today.) That's why most discussions of long range reforms for Social Security include proposals to reduce cost of living increases.
Due to these increases, the average monthly retirement check will be $1,261 in 2013, a $21 increase from the 2012 level. The maximum Social Security check for a worker retiring at age 66 next year will be $2,533, compared to $2,513 in 2012. And please note that is the maximum for someone turning 66 next year. That does not mean it is the maximum Social Security payment anyone can receive. There are millions of Social Security beneficiaries who get much more than that, primarily because they work well past age 66.
Another measuring stick, called the national wage index, is used to set increases to other provisions of the law that impact Social Security beneficiaries and taxpayers. Specifically, this includes increases in the amount of wages or self-employment income subject to Social Security tax; the amount of income needed to earn a "quarter of coverage;" and the Social Security earnings penalty limits.
The Social Security taxable earnings base will go up from $110,100 this year to $113,700 in 2013.
Most people need 40 Social Security work credits (sometimes called "quarters of coverage") to be eligible for monthly benefit checks from the system. In 2012, people who were working earned one credit for each $1,130 in Social Security taxable income. But no one earns more than four credits per year. In other words, once you made $4,520, your Social Security record has been credited with the maximum four credits or quarters of coverage. Next year, the one credit limit goes up to $1,160, meaning you will have to earn $4,640 in 2013 before you get the maximum four credits assigned to your Social Security account.
People under age 66 who get Social Security retirement or survivor's benefits but who are still working, are subject to limits in the amount of money they can earn and still receive all their Social Security checks. That limit was $14,640 this year and will be $15,120 in 2013. For every two dollars a person earns over those limits, one dollar is withheld from their monthly benefits.
There is a higher earnings threshold in the year a person turns 66 that applies from the beginning of the year until the month the person turns 66. (The income penalty goes away once a person reaches that "full retirement age.") That threshold goes up from $38,880 in 2012 to $40,080 next year.
A couple other Social Security provisions are also impacted by inflationary increases. For example, people getting disability benefits who try to work can generally continue getting those benefits as long as they are not working at a "substantial" level. In 2012, the law defined substantial work as any job paying $1,010 or more per month. Next year, that substantial earnings level increases to $1,040 monthly.
Finally, the Supplemental Security Income basic federal payment level for one person goes up from $698 this year to $710 in 2013. SSI is a federal welfare program administered by SSA, but it is NOT a Social Security benefit.
If you have a Social Security question, Tom Margenau has the answer. Contact him at email@example.com. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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