Starting in January, approximately 55 million Social Security recipients will get a 3.6% increase in benefits, due to a cost-of-living adjustment. This marks the first raise in Social Security benefits since 2009, and is a result of current inflation.
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There was no cost-of-living adjustment, or “COLA” in 2010 and 2011 due to low inflation, and marked the first two years without an increase since 1975.
The 3.6% increase will also be extended to an additional 8 million people who receive Supplemental Security Income starting on Dec. 30, 2011.
On average, Social Security payments total $1,082 per month, or just under $13,000 per year. The increase will give recipients an additional $39 per month, totaling $467 per year.
As a result of the COLA adjustment, the amount of earnings subject to the Social Security tax will also change, increasing to $110,100 from $106,800. According to the U.S. Social Security Administration, of the estimated 161 million workers who will pay Social Security taxes next year, about 10 million will face higher taxes as a result of the increase.