2013 Social Security benefits will increase 1.7%
The 56 million Americans who receive Social Security benefits will get a modest bump in monthly income next year, although the 1.7% annual cost-of-living increase is among the smallest in more than three decades.
Currently, payments for retired workers average $1,240 a month.
In 2013, that average will rise to $1,261 a month. That's an increase of $21 a month, or $252 annually.
The bump, however, "may be partially or completely offset by increases in Medicare premiums," according to the Social Security Administration (SSA). Premium increases have not yet been announced.
While benefits will increase, so will the cost to workers, as the maximum amount of earnings subject to the Social Security tax will increase by $3,700 to $113,700.
Close to 10 million of the estimated 163 million who will pay Social Security taxes in 2013 will pay higher taxes as a result, the SSA reports.
In addition, a tax break will expire at year's end that saw employee contributions to Social Security cut by two percentage points annually in 2011 and 2012.
This expiring tax holiday is part of the "fiscal cliff" that Congress has been urged to address to avoid plunging the country back into recession.
Estimated average monthly Social Security benefits
|All retired workers||$1,240||$1,261|
|Aged couple, both receiving benefits||$2,014||$2,048|
|Widowed mother and two children||$2,549||$2,592|
|Aged widow(er) alone||$1,194||$1,214|
|Disabled worker, spouse and one or more children||$1,887||$1,919|
More than 8 million of those receiving Supplemental Security Income also will see their monthly benefits increase.
For individuals, the SSI monthly maximum federal amount of $698 a month will move up to $710 a month, for an annual increase of $144.
To calculate the cost-of-living adjustment, the Social Security Administration must, by law, base it off of the Consumer Price Index.
The most recent CPI, released Tuesday, revealed that inflation has remained relatively low over the last year.
Consequently, this is one of the smallest increases in Social Security payments that we've seen since automatic adjustments were initiated in 1975.
Still, advocates praised the increase as vital for Americans who receive benefits.
"Amid rising costs for food, utilities and health care, and continued economic uncertainty, the COLA helps millions of older Americans maintain their standard of living, keeping many out of poverty," Nancy LeaMond, executive vice president for AARP, told The Associated Press.