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Social Security benefits to go up in 2009

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Older Americans will get a 5.8 percent increase in their Social Security benefits next year. It will be the largest hike in 26 years, according to AARP.

At 5.8 percent, the 2009 cost of living adjustment is the highest since 1982. The reason for this, AARP says, is rising inflation. On a more positive note, the standard Medicare premium for 2009 will remain unchanged from $96.40. Premiums will rise only for single people earning more than $85,000 annually, or for couples earning more than $170,000.

But recipients won’t benefit by much, says Alicia Munnell, director of the Center for Retirement Research (CRR) at Boston College. Munnell points out that from 2000 to 2007, Medicare premiums rose faster than the COLA — 9.8 percent per year compared to 2.7 percent.

About 50 million Americans collect Social Security benefits. This year marks the first year baby boomers will collect on those benefits. Currently, the average monthly payment for retirees is $1,090. In January it will rise to $1,153.