Social Security is bringing a little happiness to its clients in the New Year: they will receive a 5.8 percent increase in benefit payments beginning with the January payments.
The 5.8 percent Cost-of-Living Adjustment (COLA) will begin with benefits that over 50 million Social Security beneficiaries receive in January 2009. Increased payments to more than 7 million SSI beneficiaries will begin Dec. 31, 2008.
Social Security and Supplemental Security Income benefits increase automatically each year based on the rise in the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the prior year to the corresponding period of the current year.
This 5.8 percent increase is the largest since 1982.
Along with the annual COLA comes other changes, including an increase in the amount of wages subject to Social Security tax. In 2008, the maximum taxable amount was $102,000. Beginning in 2009, the maximum taxable amount will be $106,800. This change will affect about 11 million of the 164 million workers who pay Social Security tax. The tax rate remains the same: 6.2 for employers and employees, and 12.4 for the self employed.
In 2009 it will take $1,090 in taxable earnings to earn a credit of coverage for Social Security, up from $1,050 in 2008. All workers can earn up to four credits in a year.
The average retired worker will receive $1,153 per month in Social Security benefits in 2009, up from $1,090 in 2008.
People who have Medicare coverage will want to visit Medicare’s website at www.medicare.gov for changes coming in 2009.
To learn more about Social Security changes coming in 2009, visit the online fact sheet at www.socialsecurity.gov/pressoffice/factsheets/colafacts2009.htm. As always, you can find a wealth of information about Social Security at its Web site, www.socialsecurity.gov.