In what’s sure to be a bit of welcome news, the Social Security Administration has announced that Social Security recipients will receive a 3.6% increase in payments, effective this coming January. This is the first such increase in benefits since 2009, when there was a 5.8% increase. The lack of increases over the past two years was due to low inflation.
Based on the average Social Security payment of $1, 038/month, this works out to an increase of $39/month.At the same time, however, Medicare premiums are expected to increase, which could wipe out the value of a Social Security increase.
The Social Security wage limit (i.e., the amount of wages subject to Social Security taxes) is also set to increase next year from the current level of $106, 800 to $110, 100. This increase will affect roughly 10M of the 161M workers who pay Social Security taxes each year.
In other words, this is a good news, bad news sort of thing. Good news if you’re a Social Security recipient — though be on the lookout for those Medicare premium increases — but bad news if you’re employed and earning more than the Social Security wage limit.