Social Security recipients to get a raise in 2009

— -- Finally, there's some good news for retirees.

More than 50 million seniors will see their Social Security benefits increase 5.8% next year, the biggest cost-of-living increase in more than 25 years, the Social Security Administration said Thursday.

The cost-of-living increase will boost the average retiree's benefit check by $63 a month. The average retired couple will see an increase of $103 a month.

The increase comes as many retirees are struggling with higher prices for health care, low interest rates on their bank savings accounts and a sharp decline in the value of their investments.

In the past 15 months, the meltdown in the financial markets has wiped out $2 trillion of Americans' retirement savings, according to the Congressional Budget Office.

"With 401(k)s being battered in today's catastrophic economy, this shows that Social Security is the one program that retirees can depend on to provide them with a reliable foundation of income," says Karen Friedman, policy director at the Pension Rights Center, an advocacy group.

The increase, which is more than double the 2.3% cost-of-living increase for 2008, reflects changes in the consumer price index from the third quarter of 2007 through the third quarter of this year.

During that period, prices for gas and food rose sharply.

While the increase looks dramatic, "They're going to give retirees just enough to compensate for what inflation is doing to them anyway," says Jack VanDerhei, a fellow at the Employee Benefit Research Institute.

Still, even a $63 increase in monthly benefits could make a big difference to millions of seniors, says Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare.

Social Security is the only source of retirement income for 21% of seniors, Kennelly says. Social Security "is all they have, and they count every penny," she says.

Social Security also announced Thursday that the maximum amount of earnings subject to Social Security tax will increase to $106,800 from $102,000 in 2009.