Bad News for Those Born in 1947

[youbet]

and i said that the SS COLA for the 1st year is prorated by the number of months you were collecting SS that 1st year. .

I don't think that is the case, but I'm having trouble locating specific info on the SS site. In my searching so far, they make no mention of prorating your first COLA adjustment to the number of months you collected SS your first year. Perhaps someone else knows this specifically and could comment please....... ?

 

[teejayevans]

Not really. SS earnings are indexed using the average wage index (AWI) until you are age 60. CPI-U increases do not begin until you are 62, so the only people affected in 2010 will be people born in 1947. People born in 1948 will be affected if no cola in 2011. I don't know why they stop the AWI at age 60.

You expect the government to act in a logical manner??
TJ

 

[Bikerdude]

You expect the government to act in a logical manner??
TJ

I'll never be found guilty of that.

 

[CuppaJoe]

I don't think that is the case, but I'm having trouble locating specific info on the SS site. In my searching so far, they make no mention of prorating your first COLA adjustment to the number of months you collected SS your first year. Perhaps someone else knows this specifically and could comment please....... ?

If your first SS check was say, Nov. or Dec. 2008, you got that amount plus the 5.8% COLA in your January check; it doesn't matter when in 2008 you began collecting. A $1,000 check in Dec. '08 would become a $1,058 check in Jan. '09 regardless of how many months you already collected.

 

[jdw_fire]

If your first SS check was say, Nov. or Dec. 2008, you got that amount plus the 5.8% COLA in your January check; it doesn't matter when in 2008 you began collecting. A $1,000 check in Dec. '08 would become a $1,058 check in Jan. '09 regardless of how many months you already collected.

you know that from personal experience or do you have a reference from the SSA that talks about how the 1st COLA is paid? or something else?

 

[youbet]

If your first SS check was say, Nov. or Dec. 2008, you got that amount plus the 5.8% COLA in your January check; it doesn't matter when in 2008 you began collecting. A $1,000 check in Dec. '08 would become a $1,058 check in Jan. '09 regardless of how many months you already collected.

Thanks Cuppa. That's how I thought it worked and how the SS website says it works.

http://www.socialsecurity.gov/OACT/COLA/colaapplic.html

 

[CuppaJoe]

you know that from personal experience or do you have a reference from the SSA that talks about how the 1st COLA is paid? or something else?

Not my numbers but yes, from personal experience. My January 2009 payment was equal to my December 2008 payment plus 5.8%. My first SS payment was November 2008 which, to clarify, was the same amount as the December payment.

The 5.8 percent increase is the largest since 1982.

Social Security Announces Benefit Increase for 2009

Thanks for your followup and link, Youbet, I was out most of the day.

 

[jdw_fire]

Not my numbers but yes, from personal experience. My January 2009 payment was equal to my December 2008 payment plus 5.8%. My first SS payment was November 2008 which, to clarify, was the same amount as the December payment.

thank you for the info, i guess that is what i get for assuming 1 fed pension program is like another. so the hit to payment (notch) is the same size for everyone born in that year and my point about them losing out is still true.

 

[oldtrig]

I have read all of this and still not sure what it means to me. I turned 62 this past August. I am still working and from what I am seeing I will be until 66. How is turning 62 and being born in 1947 going to affect me ? I see no way I can retire any time soon anyway. I am not one of the lucky ones who will have their health insurance paid by former employer after I do retire. Maybe I will just retire and take a chance and not have coverage

 

[beowulf]

I have the same questions as oldtrig. I don't understand how this affects someone born in 1947 or 1948 unless they start taking early benefits in 2009 or 2010. If they keep working (or choose not to collect at 62), won't it all be OBE as no one gets a COLA in 2010? Under any circumstances, someone who started taking SS in Jan 2009 would get the same increase (assuming there was one) as someone starting SS in Nov 2009 - zero. How do they lose more ground than anyone else who retired before them but also gets nothing in Jan 2010? This just doesn't make sense to me - plus, the person who started taking SS in Jan 2009 will collect 11 more check than the person in Dec 2009.

This is very different than federal retirement - any increase is prorated over the number of months you are retired in a year - Jan 1 you get 12/12 of the increase, July 1 you get 6/12, etc. But, if there is no increase, you get nothing, no matter when you retired that year. Nor does any other federal retiree. How is that a penalty for those retiring in 2009?

Since it's all based (under either system) on the years you work and how much you contribute, how does the lack of a COLA put you at a disadvantage? Your starting point will be the same - you just won't get a boost for the next year, but neither will anyone else.

 

[Peter]

Since it's all based (under either system) on the years you work and how much you contribute, how does the lack of a COLA put you at a disadvantage? Your starting point will be the same - you just won't get a boost for the next year, but neither will anyone else.

I think the point is that the pre-47 people will effectively have had their boost for 2010, 2011, etc., as a result of the large boost in 2009. If you didn't get the 2009 boost then, in a sense, you'll lose out.

Although I must say that all this does have an element of fretting over 'what might have been'. In my opinion this is never a particularly useful or rewarding activity.

Peter

 

[jdw_fire]

I have the same questions as oldtrig. I don't understand how this affects someone born in 1947 or 1948 unless they start taking early benefits in 2009 or 2010. If they keep working (or choose not to collect at 62), won't it all be OBE as no one gets a COLA in 2010? Under any circumstances, someone who started taking SS in Jan 2009 would get the same increase (assuming there was one) as someone starting SS in Nov 2009 - zero. How do they lose more ground than anyone else who retired before them but also gets nothing in Jan 2010? This just doesn't make sense to me - plus, the person who started taking SS in Jan 2009 will collect 11 more check than the person in Dec 2009.

This is very different than federal retirement - any increase is prorated over the number of months you are retired in a year - Jan 1 you get 12/12 of the increase, July 1 you get 6/12, etc. But, if there is no increase, you get nothing, no matter when you retired that year. Nor does any other federal retiree. How is that a penalty for those retiring in 2009?

Since it's all based (under either system) on the years you work and how much you contribute, how does the lack of a COLA put you at a disadvantage? Your starting point will be the same - you just won't get a boost for the next year, but neither will anyone else.

OK let me try this again. first forget getting a different COLA in the 1st yr based on the month you turn 62, i appear to be wrong about that. however, to explain how what happened is disadvantagous to people born in 1947 you need to 1st understand that once you hit the age of 60 your wages are no longer indexed but, instead nothing is changed till you reach the age of 62 and then your benefit is indexed to the CPI, whether you collect it or not. sooo if the year before you turn 62 the CPI shoots up, you dont get that increase. and if the CPI drops in the year you turn 62 then your starting point for the CPI is (using the 2009 numbers) 215.718 but you wont get an increase in your SS pmt till the CPI goes above (using the 2008 numbers) 219.278 which means the 1st 1.65% of CPI increase you experience you will not get credit for (you will not get a COLA for). and that loss will affect EVERY SS check you get after the 1st year, for the rest of your life.

 

[jdw_fire]

OK let me try this again. first forget getting a different COLA in the 1st yr based on the month you turn 62, i appear to be wrong about that. however, to explain how what happened is disadvantagous to people born in 1947 you need to 1st understand that once you hit the age of 60 your wages are no longer indexed but, instead nothing is changed till you reach the age of 62 and then your benefit is indexed to the CPI, whether you collect it or not. sooo if the year before you turn 62 the CPI shoots up, you dont get that increase. and if the CPI drops in the year you turn 62 then your starting point for the CPI is (using the 2009 numbers) 215.718 but you wont get an increase in your SS pmt till the CPI goes above (using the 2008 numbers) 219.278 which means the 1st 1.65% of CPI increase you experience you will not get credit for (you will not get a COLA for). and that loss will affect EVERY SS check you get after the 1st year, for the rest of your life.

and to make matters even worse (since almost all of the drop in CPI occured in the 4th qtr of 2008) at the start of 2009 (end of 2008) the CPI was 210.228 which means people born in 1947 have lost 4.3% (counted from the beginning of 2009) since there will be no COLA for them until CPI gets above the 219.278 point. and again, this 4.3% is lost forever and makes each check the person receives from SS smaller then it would/should be if the COLA calculation had started (used the CPI number) at the time they turned 62.

 

[oldtrig]

How much difference is this going to make anyway ? If someone depends on SS for their only source of income then they are in trouble anyway and not have much of a life. I never thought I would get it anyway so it will not bother me. I will also delay drawing until later because I still enjoy working. I work as an assistant superintendent at a City golf course and I love playing golf. What else could a person ask for that loves golf. I might as well keep on working because if I were not I would probably be at the course anyway. That is how I feel today. As always with me tomorrow might bring a different view

 

[CuppaJoe]

How much difference is this going to make anyway ? ....

For example, a retiree who was collecting $1,000/mo. in Dec. 2008 and then collected $1,058 in Jan. 2009: the difference it makes is an additional $696/year or $20,880 over 30 years. That is the equivalent of about an additional $17,420 in a PF withdrawn at 4%. The SS recipient who started collecting $1,000/mo. in Jan. 2009 or later, does not get that $20,880.

 

[Bikerdude]

How much difference is this going to make anyway ?

The difference is it's not fair. People who pay the same amount into a national system should get the same out. I don't think anyone wants special treatment just the same treatment. It's a mathematical flaw in the SS system plain and simple.