- Congress has not yet been able to come to an agreement regarding the payroll tax break. If this does not change, you can expect an average tax increase of $1000 per year, or $83 per month, to show up in your paycheck.
- Health insurance costs offered through the workplace have increased. You probably saw this amount when you completed open enrollment. On average, you can expect an increase of 7.2%. So, if your overall plan cost $5000 last year, you can expect it to run about $5360 this year, an increase of $30 per month. Check with your employer for the exact amount as costs vary.
- Your employer deducts your social security contribution for you, until your salary reaches a maximum amount. In 2011, that amount was $106,800. Once your earnings reach that point, you are not required to contribute and your earnings become yours again. You may have noticed this before now, particularly if you receive a bonus in the first half of the year and your take home pay seems to go up in the latter part of the year. For 2012, the social security maximum increases to $110,100. You will now be contributing to social security on an additional $3300. At the current 6.2% rate, that means an additional $204.60 per year. This is a sneaky one since it does not increase monthly deductions. Payments will just continue longer throughout the year.
- If you are taking advantage of your employer sponsored retirement plan, this is a good one for you. The government increased the amount you can contribute to your 401(k) plan from $16,500 to $17,000. I hope everyone is taking advantage of this! While the increase is helpful for your retirement savings, it reduces your take home pay by $500 over the course of the year. At least this deduction is on a tax-deferred basis for now.
Baby, it’s cold outside, so get your sweaters and blankets out now. Beginning in 2012, the “January Effect” will be a decrease in your take home pay. This is something you will want to be aware of and factor into your budget so you won’t be surprised next month. There are four main contributors to this change.
Thanks for reading!
Think of me as your Mom - I'm hear to listen, give sage advice, and help educate you with your finances. As with all Moms, sometimes I have to dish out tough love so you can reach your goals.
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