What you probably don't know about COLA 2012

Dec 12, 2011, 9:17 a.m.

Most Social Security beneficiaries are eagerly awaiting the recently announced 3.6% COLA increase for 2012, which will be welcomed with open arms after two years of zero increase. Naturally, this good news spread like wildfire, but there are a few additional increases associated with COLA's annual adjustment that weren't broadcast through every news provider that are still important for beneficiaries to know. For receivers of retirement and Social Security benefits, the following little-known facts can be very helpful and informative for keeping you up to date with all of the latest news that may even affect you or your loved ones.

The 3.6% Increase Will Be Reflected in January 2012 Payments

The good news just keeps rolling in. It sounds like nothing special at first, but remember that Social Security benefits are usually paid after the month has passed. This means that the check you receive in January of 2012 will actually be a payment for December 2011. Why is this? About twenty years ago, a group of seniors complained to their congress representatives of feeling cheated out of a month's COLA because they hadn't received their first increase until February. To make matters simpler and avoid this confusion, Congress decided to make increases effective with the December payment of the previous year so seniors would receive their benefits by January of the next year.

Social Security Disability Beneficiaries Get an Increase of Their Own

Retirees are already looking forward to the 3.6% increase, and so can those receiving Social Security disability benefits. The new regulation affects this group because the substantial income level for those receiving benefits has been increased from $1,000 per month to $1,010 per month. If you receive disability benefits, but still attempt to work throughout the month, this means you can earn $10 more than before and still maintain eligibility for your disability payments.

Another COLA Increase Affects Receivers of SSI Benefits

If you are a beneficiary of Supplemental Security Income (SSI), there is additional good news in another COLA increase. Originally $674 per month, the standard federal SSI payment will grow to $698 per month in 2012. However, some states add the money to the basic federal payment, while others pass the increase along. If you aren't sure about the practices in your state, make sure to contact your congressperson to find out if this increase affects you.

A Change in Credit Requirements for Social Security Hopefuls

An additional COLA change affects those working to earn the required credits and qualify for Social Security. The way the system stands now, the majority of American workers earn four credits each year. In 2011, these credits were dependent on whether or not you earned at least $4,480 for the year, but in 2012 the limit has risen to $4,520. Although the limit has risen, workers can still earn one credit for each $1,130 they earn in 2012. However, workers can not earn more than four credits per year. The goal to qualify for Social Security retirement benefits is 40 credits, though you may still be eligible for Social Security disability payments or survivor benefits for your family with fewer credits.

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