For the first time since 2009, the Social Security Administration announced a cost of living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income (SSI) benefits. More than 60 million Americans will see the 3.6% increase in their payments by January 2012. The increase was put in place to ensure the purchasing power of these benefits isn’t eroded by inflation and is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers.

This is good news for many, but I wanted you to be aware of another change, as well. Starting next year, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase from $106,800 to $110,100. 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.

Keep in mind, as of May 2011, new recipients of federal benefits – including Social Security retirement benefits – are required to establish direct deposit to receive their payments electronically; physical checks will no longer be issued. In addition, beginning March 2013, all federal benefits – new and existing – will require direct deposit. So if you’re already receiving benefits by this date, you will need to establish electronic transfers to your bank or financial institution. I’m happy to help you set up a cash management solution that will satisfy the new direct deposit requirements.

You may also like to know that we’re now in the annual open enrollment period for Medicare that happens each fall. This year, you have until December 7 to review your benefit choices and costs and elect new coverage, if you need to make changes. Please take the time to go over these important options. If you haven’t yet enrolled in Medicare, keep in mind you must do so within the seven-month period around your 65^th birthday. Please contact me if you have any questions or need assistance; I’m available to help.

Compliance approval M12-0202