| Social
Security: What's Happening in 2012
By
Richard J. Koreto
Posted on 12/22/11
For 2012, some changes in Social Security are definite,
and others are definite maybes. Much depends on whether the
House and Senate can work out their differences and extend,
for a few months or even a year, various payroll tax cuts.
According to the Social
Security Administration, the rate
for 2012 is not changing: 7.65 percent for employee and 15.30%
for the self-employed. This includes both the standard Social
Security or OASDI contribution (6.20 percent) and the Medicare
or HI portion (1.45 percent).
However, in 2011, the government reduced
the OASDI payroll tax by two percentage points, which was
applied to the portion
of the tax paid by the worker and the self-employed individual.
This "bonus" may return in 2012, depending on what
deal Congress works out. If nothing happens, however, the
7.65 percent rate will stand.
More definite is the maximum taxable earnings. That is,
at what point is income no longer taxed? For 2012, it goes
up from $106,800 to $110,100. The SSA stresses that this
limit applies only to OASDI. There is no income limit for
HI.
For those already on Social Security or Supplemental Security
Income (SSI), the government is giving a 3.6 percent cost
of living adjustment (COLA) for 2012. The SSA based this
decision on the increase in the Consumer Price Index (CPI-W)
from the third quarter of 2008 through the third quarter
of 2011.
Rules
for Retirees
Also
applicable to retirees are new limits on working while
they collect Social Security. The regulations
here are
a little complex:
- Retirees
who have already reached "normal retirement
age" (NRA) can collect Social Security while they
continue to earn without having any SSA benefits withheld.
NRA has
changed over the years; check
the SSA chart.
- For
retirees who are below NRA in 2012, the government will
withhold $1 in benefits for every $2 of earnings in
excess
of $14,640—up from $14,160 in 2011.
- For
retirees who are below NRA in 2012, the government will
withhold $1 in benefits for every $3 of earnings in
excess
of $38,880—up from $37,680 in 2011.
- For
retirees who reach NRA in 2012, the annual exempt amount
is
$38,880. This exempt amount applies only to earnings
made in months before the month of NRA attainment.
The SSA has provided on online benefits
calculator to help
current and incipient retirees check out their particular
situations.
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