PITTSBURGH (KDKA) — Millions of Americans will get an increase in Social Security next year, but that also means others may end up paying higher taxes.
At the Lawrenceville Senior Citizen Center, a low-stakes game of bingo was underway shortly after the government announced higher Social Security benefits next year.
“It’s about time. We need it. Yes we do,” Irene Deutsch of Lawrenceville told KDKA Money Editor Jon Delano.
The cost-of-living increase is 3.6 percent – about $516 a year for the average Social Security recipient.
Many seniors say they know exactly where those dollars will go.
“Probably spend it on medicine. We take a lot of medicine. Both of us took a stroke,” said Betty Rawl.
Not everyone is happy. After all, the last Social Security increase was back in 2009.
“We haven’t had a raise in three years. Everything has gone up. I think we should be getting a lot more,” noted Tony Golembiewski.
About 55 million seniors will see an increase in January, along with 8 million poor and people with disabilities who get supplemental benefits.
But to pay for the higher benefits, 10 million Americans who make over $106,800 will have their wages taxed for Social Security until they reach the new cap of $110,100.
And taxes could go up for everyone.
Last year’s payroll tax of 6.2 percent was cut to 4.2 percent of pay for this year.
But that jumps back to the higher rate next year unless Congress agrees to President Obama’s Jobs Bill which cuts it to 3.1 percent.
While most seniors seem to appreciate the Social Security benefits increase, how helpful it is really depends on how high Medicare premiums go up for seniors.
An announcement on that is expected later this month.