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Social Security changes in 2012

The Social Security Administration has good news for retirees and soon-to-be retirees. In 2012, the Social Security cost of living adjustment (COLA) increased for the first time since 2009. The change gives Social Security beneficiaries a 3.6 percent bump in their benefits.

Higher Medicare premiums will eat up some of that increase. Fortunately, however, the actual Medicare premium increase for 2012 is lower than initially predicted. Most Medicare recipients will pay an extra $3.50 per month in 2012 instead of an additional $10.20, which was an earlier forecast. Also, the Part B deductible actually drops by $22 this year[1].

What will you receive from Social Security?

Twenty-three percent of workers aren't sure how much of their retirement income will come from Social Security, according to the Third Quarter 2011 Principal Financial Well-Being IndexSM. The portion of your current income Social Security will replace varies based on your age and your income. The table below shows a range of income levels and replacement percentages for someone at full retirement age.

Social Security Income Replacement

Age Annual Income
< $30,000 $30,000-
66 54% 48% 43% 38% 32% 27% 21% 16%
67 58% 52% 46% 41% 35% 29% 23% 17%

Full retirement age for Social Security is based on the year you were born. See for details.

Social Security benefit estimates

In 2011, the Social Security Administration announced it would stop mailing paper statements outlining individuals' Social Security earnings records and estimated benefits. Instead, you can get benefit information by:

  • Using the Social Security Retirement Estimator at
  • Calling the Social Security hotline at 1.800.772.1213
  • Visiting a local Social Security field office

Close the retirement income gap — boost your savings now

If you'll receive less than expected from Social Security — leaving a gap in your retirement income — there's still time to make up the difference. By saving as much as you can now, you may be able to help close the gap.

Begin by creating — or revisiting — a plan that includes Social Security. Our online tool[2] can help. Your financial professional can also answer your questions.


USA Today, Medicare's 2012 premium increase is less than expected, (10/27/2011).
My Principal® Edge Milestones is not available online for all participants. Milestones review is limited only to those financial concerns you express and is not intended to be a financial plan or investment advice from any company of the Principal Financial Group.

Insurance products from the Principal Financial Group® are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company. Plan administrative services are provided by Principal Life. Securities are offered through Princor Financial Services Corporation, 1-800-247-1737, member SIPC. Princor®, Principal National and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.


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