2009 Social Security Benefits Increase

Beginning January 2009, the monthly Social Security and Supplemental Security Income benefits will increase by 5.8 percent. This means that more than 55 million Americans will be getting a little extra from the government in the New Year. Though Social Security and Supplemental Security Income benefits include a yearly cost-of-living increase, this is the largest increase since 1982. The increase is based on the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

As nice as it may sound to some people to be getting an increase in Social Security benefits, the rate of increase is based on our inflation rate. Therefore, the purpose for the increase is to keep Social Security recipients at the same relative income level during this time of inflation.

Regardless, this increase comes during an unstable time in our economy where every little bit is appreciated. In the first half of the year, the cost of oil, energy and related products increased dramatically. Since then, prices have slowly been coming down for these products. So, the increase that was really just supposed to be a cost of living adjustment may actually be beneficial as inflation looks as though it’s moderating. Overall, the average disabled worker will be receiving about $60 more every month as a result of this increase.

When news of this large rate of increase began spreading, many Americans feared that it would be offset by the yearly increase in Medicare premiums. However, this year the Part B premium will not increase. It will be the first year since 2000 that the Medicare Part B premium will stay at the same $96.40 as the year before.

Recent polls reveal that one in three beneficiaries rely on Social Security for 90 percent of their total income. Despite the fact that Social Security was originally created during President Roosevelt’s term as a supplemental source of retirement income, more and more Americans are heavily relying on it as their sole source of support during retirement. Therefore, for many Americans, this increase 5.8% increase was critical.

Of course, the Administration has to get funds for this increase from somewhere, so here’s the catch. As of January 2009, the maximum amount of earnings subject to Social Security tax will be raised from $102,000 to $106,800. As a result, 11 million Americans will pay higher taxes due to this new taxable maximum amount.

Overall, despite the increase in benefits and the new increase in taxes for some, the major menacing issues surrounding the Social Security Administration are still lurking. By 2017 the Administration will be paying out more than it takes in and by 2041 the trust fund that the money is coming from is scheduled for depletion.

Even though news of the increase has come in a time when most Americans really need the help, the long-term issues in regards to this Administration have yet to be resolved. As the political climate changes, hopefully the Presidential candidates will have fresh ideas on solutions to solve the impending obstacles in Social Security. In the meantime, Americans should enjoy this scheduled increase but remain mindful of the challenges that this Administration continues to face.