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Social Security Benefits To Increase By 1.7% In 2013


Americans receiving Social Security benefits will see a 1.7 percent in their monthly payments next year, the Social Security Administration announced Tuesday.

The cost of living adjustment, which is tied to a key gauge of inflation, is notably smaller than the 3.6 percent increase seen in 2012.

However, the 1.7 percent increase still reflects a notable improvement from the two previous years, when benefits were left unchanged.

The Social Security Administration said 56 million Social Security beneficiaries will see the cost of living increase beginning in January of 2013.

Increased payments to more than 8 million Supplemental Security Income beneficiaries will begin on December 31, 2012, the SSA added.

Along with the increase in benefits, the maximum amount of earnings subject to the Social Security tax will rise to $113,700 from $110,100.

Approximately 10 million of the 163 million workers who will pay Social Security taxes in 2013 will pay higher taxes as a result of the increase in the taxable maximum, the SSA said.

AARP Executive Vice President Nancy LeaMond said, "The annual [Cost of Living Adjustment] is critically important to the financial security of the nearly 55 million Americans receiving Social Security benefits today."

"Without the protection against inflation offered by the COLA, the average annual retirement benefit of roughly $14,700 a year would quickly erode in value," she added.

However, LeaMond warned that most of the cost of living adjustment will be consumed by health care and prescription costs, which she said continually outpace inflation.

The SSA noted that the increase in Social Security benefits for some beneficiaries may be partially or completely offset by increases in Medicare premiums.

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