1/3/2012 5:39 PM ET|
11 retirement changes for 2012
Social Security recipients are finally getting a raise. Retirees -- and anyone planning to retire -- should also be aware of 10 other changes to expect in the new year.
Seniors will get significantly bigger Social Security checks in 2012 and face only modest increases in Medicare premiums. Workers will also be eligible to defer taxes on more money in their 401k plans and get more disclosures about the fees and expenses they are paying. Here's a look at how retirement benefits are set to change.
1. Bigger Social Security checks. Social Security recipients will get a boost in payments next year for the first time since 2009. Social Security checks will increase 3.6% in 2012, with the typical retiree receiving about $43 more per month.
2. Higher Social Security taxes. The maximum amount of earnings subject to Social Security tax will increase to $110,100 in 2012, up from $106,800 in 2011, and result in about 10 million workers paying higher Social Security taxes. Also, the temporary reduction in workers' Social Security taxes from 6.2% to 4.2% of earnings in 2011 is scheduled to end this year under current law.
3. A small increase in Medicare Part B premiums. The standard Medicare Part B premium will be $99.90 in 2012, up $3.50 from 2011 for people who signed up for Medicare in 2009 or earlier. Retirees who signed up for Medicare Part B in 2010 or 2011 and were charged the standard premium for new enrollees of $110.50 or $115.40, respectively, will see their premiums decline to $99.90 in 2012. High-income Medicare recipients whose modified adjusted gross income is greater than $85,000 for individuals or $170,000 for couples must pay higher Part B premiums, ranging from $40 to $219.80 per month more than the standard rate. But even most high earners will pay less in Medicare premiums than they did last year.
4. Slightly better Medicare Part D gap coverage. Medicare Part D plans have a coverage gap that begins once an enrollee spends $2,930 on prescription drugs and lasts until catastrophic drug coverage kicks in after the retiree has spent $6,658 on medication. Brand-name drugs purchased in that gap will be discounted by 50% and generic drugs by 14% in 2012, up slightly from 50% and 7%, respectively, in 2011.
"Every plan is now offering a certain level of coverage in the coverage gap, which in previous years was a big concern for some people," says Juliette Cubanski, a policy analyst at the Kaiser Family Foundation. "As part of the health reform law, the coverage gap is being phased out over time. That improves the value of the Part D benefit for every plan that is out there."
5. Higher 401k limits. The contribution limit for 401k's, 403b's and the federal government's Thrift Savings Plan will increase to $17,000 in 2012, up from $16,500 in 2011. However, catch-up contribution limits for those 50 and older will remain $5,500 next year.
6. 401k fee disclosure. Retirement savers can expect to get additional information about the costs and fees that are deducted from their 401k account. The Labor Department issued a regulation in 2010 that requires most 401k plans to disclose the fees associated with participation in the 401k plan and costs of each investment option to plan participants by May 31, 2012.
"Because employers have to produce this for participants, they are paying more attention to their fees. It's causing them to look for lower-cost investments and recordkeeping solutions," says Robyn Credico, senior retirement consultant at Towers Watson. "Participants will see a line item of fees on their statements. They were always paying it, but it will be more transparent for some participants."
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Where do you get your information - from Obama?? That "significant increase" in social security and the "small increase" in Medicare premiums resulted in my social security check being $70 per month LESS this year than last. BTW, my medicare premiums are hugely MORE that the $99 you quote, and my income is significantly UNDER $85,000.
Please get your facts right before you go publishing misinformation.
hey don't worry,Obama will take care of us.I see alot of things going on.Alot of people using the green card.Most are not working or don't care to.My neighbor use to brag about his health insurance,he did not pay a cent
damn John York,pa
Your reasoning goes awry if you are hospitalized, which is primarily what part B is for. Do you have hospitalization coverage from somewhere else? I saw nothing but positive benefit when my mother-in-law was on part B and paid for a small supplimental policy (about $ 20/mo). She had tens of thousands of dollars in hospitalization costs for surguries, chemo, radiation, etc and paid less than $ 500/annual out of pocket.
You can't be white, a tax payer, born here, work all your life and expect ANYTHING back from this president.
In his mind we are the devil!
Of course, if you are here illegally, pay no taxes or were born here but choose not to work - we got you covered!
Thank you Obama , thank you!
Bottom line is that if you work and contribute and try to plan for a retirement, there will be some law or rule there to take from you. As a retired federal employee, I have worked since I was 18. I retired after 37 years. I was a Naval reservist for 20 years. I have worked part time since I was 16. I currently work part time today and pay social securit & taxes. I was always told that if I had 40 quarters in social secial security I would be eligible for a pension. I was trying to plan some sort of a retirement as social security was not set up to be the only retirement, it was set up to help. All of the above is funny. In the end, I am eligible for little or nothing, the amount won't pay my electric bill. I would have been better off, not working a lot, getting paid under the table, getting on drugs or alcohol etc. then I could get welfare, subsidized housing, and ssi for free and been eligilbe for a higher social security check. The other issue is that I have to sign up for medicare A and I will probably have to sign up for medicare B as the insureance companies will no longer be considered primary. You are damned if you do and damned if you don't.
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