As the Bureau of Labor Statistics (BLS) finalized 2012 Q3 inflation, the Social Security Administration has announced cost-of-living adjustments for benefit recipients for next year. Based on Twelve-month inflation (measured by CPI), Social Security payments will increase by a very modest 1.7% for 2013.
Retirees should be prepared for the possibility that this 1.7% increase could be wiped out by increases in Medicare Part B premiums, yet unannounced. Note that net benefit payments cannot decrease from a prior year thanks to a provision in the Social Security platform.
The Social Security wage base (the amount of earnings taxed at 6.20% for employee’s wages) will increase from $110,100 to $113,700, an increase of 3.27%.
Additionally, increases in the savings limits to 401(k) plans and similar vehicles have been confirmed. Workers with access to a 401(k) plan will be able to save $17,500 in 2013, up from $17,000 in 2012. IRA account limits will increase to $5,500 annually.
Catch-up provisions for those over the age of 50 also remain unchanged, at $5,500 for 401(k) plans and $1,000 for IRA accounts.
Full details from the Social Security Administration here: http://www.ssa.gov/pressoffice/factsheets/colafacts2013.htm