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Social Security gets adjusted

By Randy Neumann

Over the many years that I have been presenting retirement seminars at Bergen Community College and the Ridgewood Public Library, I have learned that most people cannot get enough of Social Security information. Therefore, I always make sure I have a Social Security expert on hand. Last month was no exception. We had a large turnout at the Ridgewood Library and our guest speaker was from BlackRock, the largest investment company in the world that sponsors a cadre of SS specialists who make presentations to the public. During his presentation, he mentioned that there would be an important update regarding Social Security. Here it is:

The Social Security Administration announced in a press release last October, the first Cost-of-Living Adjustment since 2009.

“Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase 3.6 percent in 2012, the Social Security Administration announced today. The 3.6 percent cost-of-living adjustment (COLA) will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012. Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011.”

That’s the good news.

The bad news is, “Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800. Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.”

Now, for an interesting tidbit. I recently discovered, while working with a new client that once you reach full retirement age (66 for us baby boomers), if you have children below the age of 18, they are entitled to one-half of your monthly retirement benefit until they reach age 18. Additionally, if they are full-time students, they can collect until they become 19.

Further, benefits paid to your child will not decrease your retirement benefit. In fact, the value of the benefits he or she may receive, added to your own, may help you decide if taking benefits sooner may be more advantageous.

Within your family, each qualified child may receive a monthly payment of up to one-half of your full retirement benefit amount. However, there is a limit to the amount that your family can collect. Totals vary, but, generally, the total amount you and your family can receive is about 150 to 180 percent of your full retirement benefit.

When you qualify for Social Security retirement benefits, your children may also qualify to receive benefits on your record. Your eligible child can be your biological child, adopted child or stepchild. A dependent grandchild may also qualify.

To receive benefits, the child must: ·

Be unmarried; and

· Be under age 18; or

· Be 18-19 years old and a full-time student (no higher than grade 12); or ·

Be 18 or older and disabled from a disability that started before age 22.

A detailed review of the changes made by the new cost-of-living adjustments (COLA) including estimated average monthly Social Security benefits payable in January 2012:

All retired workers: $1,186 before 3.6 percent COLA; $1,229 after 3.6 percent COLA.

Aged couples, both receiving benefits: $1,925 before 3.6 percent COLA; $19,994 after 3.6 percent COLA.

Widowed mother and 2 children: $2,455 before 3.6 percent COLA; $2,543 after 3.6 percent COLA.

Aged widow(er) alone: $1,143 before 3.6 COLA; $1,184 after 3.6 percent COLA.

Disabled worker, spouse and one or more children: $1,826 before 3.6 percent COLA; $1,992 after 3.6 COLA.

All disabled workers: $1,072 before 3.60 percent COLA; $1,111 after 3.6 percent COLA.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for the individual. Randy Neumann CFP (R) is a registered representative with securities and insurance offered through LPL Financial. Member FINRA/SIPC. He can be reached at 600 East Crescent Ave., Upper Saddle River 201-291-9000.

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