On Wednesday, October 19, 2011 the Social Security Administration announced the first cost-of-living adjustment (COLA) since 2009. Over 60 million Americans will receive a 3.6% increase in their Social Security and Supplemental Security Income (SSI) benefits.

Increased payments for over 8 million SSI beneficiaries begins on December 30, 2011, and nearly 55 million Social Security beneficiaries will start getting their 3.6% cost-of-living adjustment in January 2012. According to the SSA press release, the Social Security increase for some beneficiaries “may be partially or completely offset by increases in Medicare premiums.”

More information:

Visit Extend Health — the nation’s largest private Medicare exchange.

Update 2/14/2011: See this post for more about the Part D premium charges, and a link to the table on the Social Security web site where you can figure out what your amount will be.

Update 11/4/2010: A reader called Social Security to find out what his IRMAA would be (see comment below) and was told that he needed to call Medicare to get that information. Maybe he got hold of someone who was uninformed about Social Security’s role in determining the fee? If anyone else calls Social Security and DOES get an answer, we would be very appreciative if you’d leave a comment here to let other readers know about it.

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We just posted this in a reply to a question from a reader, but it seems like it might be useful to many individuals and to benefits managers who may be getting questions from their retirees.

The healthcare reform bill (the PPACA) created a requirement that as of Jan 1 2011, higher income people will pay an extra amount in addition to their monthly prescription drug premium. This extra amount is called the Income Related Monthly Adjustment Amount (IRMAA). IRMAA will affect those people whose modified adjusted gross income is $85,000 or more (for singles) and $170,000 or more (for couples filing jointly) in 2009 and later.

The extra amount will be deducted automatically from Social Security checks.

We called Medicare to see if they could provide more specifics. They explained that individuals should call Social Security at 1-800-772-1213 to learn what the exact amount will be and to learn if they qualify for assistance with the IRMAA.

Reuters writer Donna Smith takes a look at the discouraging financial picture facing many Social Security recipients in 2011. With the announcement this week that there would be no COLA increase for the second year in a row, coupled with low returns on their savings, many retirees will be forced to tighten their belts as their real costs – for food, energy, and medical care – continue to rise. “The average Social Security benefit is around $14,000 and experts say about one-third of retirees rely on the payouts from the government-run program for more than 90 percent of their income,” according to Ms. Smith. 

Fortunately, we’re seeing some good news on the Medicare premium front – on top of a predicted average 2011 decrease in Medicare Advantage premiums of 1 percent, a new report out today from Avalere predicts that Part D premiums for the top ten most popular plans will grow by just .23 percent- a sharp drop from the consulting company’s prediction a month ago that they would rise by 10 percent in 2011.

It looks like a number of factors are conspiring to keep older people in the workforce longer, and that may be a very good thing for the economy. As a result of the current recession, Baby Boomers are already planning to retire later, or not at all. Over the next ten years, jobs growth will outpace the number of younger people available to fill them by as many as 5.7 million jobs. That means more employers will need to retain and/or hire older workers, and more older workers will continue to pay into Social Security and Medicare. Chris Farrell in BusinessWeek makes the case for an optimistic outlook.