The Social Security Administration just announced benefit increases effective in 2013. Current retirees will receive a cost-of-living increase, beginning in January 2013, of 1.7%, reflecting the increase in CPI-W between the third quarter of 2011 and the third quarter of 2012.
In addition, the maximum amount of earnings subject to Social Security tax will increase 3.1% in 2013, from $110,100 to $113,700, based on an increase in the ‘national average wage’ during 2011.
These changes will affect benefits for currently retired individuals, as well as those contemplating retirement. Employers who sponsor retirement plans that are ‘coordinated’ with Social Security in some fashion will also see an impact on benefits earned and payable under such plans.
IRS announcement anticipated
The release of September CPI figures by the Bureau of Labor Statistics also provides information needed to determine relevant 2013 thresholds and limits for retirement plans. Between the third quarter of 2011 and the third quarter of 2012, CPI-U increased 1.70%. Ahead of the official release by IRS, we have summarized the 2013 limits for various purposes below, along with values for 2011 and 2012: