New Rates for Social Security Benefits, Medicare Premiums in 2012
The first increase for inflation since 2009 offsets a Medicare premium hike.
Retirees breathed a sigh of relief when the Social Security Administration announced that benefits would increase 3.6% in 2012, the first cost-of-living adjustment in three years. For the average retiree, Social Security benefits will increase $43 a month, to $1,229. For most beneficiaries, that more than offsets a simultaneous increase of $3.50 in Medicare Part B premiums, for a total of $99.90 per month. Medicare Part B premiums cover doctor visits and outpatient care and are usually deducted from monthly Social Security benefits.
Part B premiums will actually decline for some retirees who first enrolled in Medicare in 2010 and 2011. They, too, will pay $99.90 per month in 2012, down from the $110.50 or more they had paid each month since becoming eligible for benefits.
But high-income beneficiaries -- individuals with modified adjusted gross income of more than $85,000 and married couples with joint income of more than $170,000 -- will continue to pay extra for Medicare coverage. The monthly Part B premium, including the surcharge, will range from $139.90 per person to $319.70 per person. High-income retirees will also pay more for Part D prescription-drug coverage, ranging from $11.60 to $66.40 per person per month on top of regular Part D premiums.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Workers affected, too. High earners will pay more in payroll taxes in 2012. The maximum wage subject to the payroll taxes that fund Social Security increases to $110,100. That's up $3,300 from the $106,800 maximum taxable wage base that has been in effect since 2009. Top earners will pay an extra $138.60 in taxes if the current 2% payroll tax reduction is extended through 2012, as expected, or an extra $204.60 if it's not.
Retirees who continue to work will be able to earn a bit more in 2012 before they have to sacrifice some of their Social Security benefits. The earnings cap was increased $480, to $14,640 in 2012. Seniors who have not reached their normal retirement age must give back $1 in benefits for every $2 they earn over that limit.
-
States That Tax Social Security Benefits in 2026Retirement Tax Not all retirees who live in states that tax Social Security benefits have to pay state income taxes. Will your benefits be taxed?
-
QUIZ: What Type Of Retirement Spender Are You?Quiz What is your retirement spending style? Find out with this quick quiz.
-
How to Avoid the Financial Quicksand of Early Retirement LossesSequence of returns — experiencing losses early on — can quickly deplete your savings, highlighting the need for strategies that prioritize income stability.
-
9 Types of Insurance You Probably Don't NeedFinancial Planning If you're paying for these types of insurance, you may be wasting your money. Here's what you need to know.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online BargainsFeature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
457 Plan Contribution Limits for 2026Retirement plans There are higher 457 plan contribution limits in 2026. That's good news for state and local government employees.
-
Medicare Basics: 12 Things You Need to KnowMedicare There's Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare — and much more.
-
The Seven Worst Assets to Leave Your Kids or Grandkidsinheritance Leaving these assets to your loved ones may be more trouble than it’s worth. Here's how to avoid adding to their grief after you're gone.
-
SEP IRA Contribution Limits for 2026SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $70,000 in 2025, and up to $72,000 in 2026.
-
Roth IRA Contribution Limits for 2026Roth IRAs Roth IRAs allow you to save for retirement with after-tax dollars while you're working, and then withdraw those contributions and earnings tax-free when you retire. Here's a look at 2026 limits and income-based phaseouts.
-
SIMPLE IRA Contribution Limits for 2026simple IRA For 2026, the SIMPLE IRA contribution limit rises to $17,000, with a $4,000 catch-up for those 50 and over, totaling $21,000.
