Chained CPI - SS loss Calculator

[gerntz]

It's underfunded & something needs to be done. Believe gradually raising ages from 62 & 67 to 65 & 70 is right to do too. Afterall, we're living way longer than when this program started. If you get disabled between 62 & 65, still covered by disability payments.

[BLS53]

AARP scare tactic. They don't know what inflation is going to be, much less know what the difference between CPI-W and Chained CPI will be. There is no absolute percentage difference between the 2 formulas. The difference will vary from year to year, just like any CPI indicator. Given BLS has only calculated a Chained CPI since 2003, makes future projections even more speculative. You can't have a calculator with just the annual benefit and some future decade, and expect to come up with any figure close to being accurate.

This is the problem with entitlement reform. One side doesn't want any changes at all, and the other side wants to scrap the system. There's got to be a middle ground somewhere. AARP ranting about Chained CPI, is like complaining about not getting an extra slice of bread, while the other side plans to take your whole dinner away.

[MichaelB]

Let's keep it friendly, folks.

[Independent]

Quote:

Originally Posted by gsparks2 I wish they had posted the assumptions and projections they used for the calculator, such as projected wage growth, projected CPI, projected chained CPI.

I couldn't find those assumptions either. But, I can reproduce the numbers assuming this:

Wage growth is irrelevant (because CPI is used for post-retirement adjustments)
CPI growth is 0%
Chained CPI is CPI - 0.292% annually

1) Note that the result they show is not the annual adjustments, it's the sum of all adjustments through that year (so if you pick 5 years, it's the sum of 5 numbers)

2) The point of this suggestion is to reduce SS costs. The SS actuaries have estimated the impact on SS finances here: Long Range Solvency Provisions (Item A3)
They use an annual difference of 0.300%. I'm not sure why I had to use a slightly different number to match the AARP calulation, but the two numbers are very close.

I'd say that (1) is partially misleading. Some people will assume the AARP number is the sum of all adjustments up to that year, others will assume it's the impact in a single year.

I'd say that (2) is reasonable. This is largely about trade-offs - How much does this improve SS finances? vs. How much does this impact individual benefits? So it makes sense that the AARP would use the same assumption as the SS actuaries.

[imoldernu]

This may earn me a warning, but I've been involved in understanding the government CPI calculations since the early 1990's, and while I don't quarrel with the way it has been used, nor the effect on the economy, the "means" of calculating the different versions of the CPI, are, at the least, suspect.

What used to be open and above board on the government site, is now not shown... namely the constitute of the basket of goods and the shopping venues used to establish the values that comprise the CPI.

While I don't recommend this site, since it has a negative bias, it does point to a difference between actual inflation and that which is measured by government statistics.

Alternate Inflation Charts

Since the chained CPI derives from the basic CPI, the relative differential would still obtain, simply shifting from absolute to incremental adjustments.

For many ER members, Social Security is not a cornerstone for financial security, but for the vast majority of retired Americans, it comprises the heart and very basis for security during the retirement years.

In my own case, I shouldn't give a damn, but I do think continued inroads into "entitlements" will eventually (perhaps in the next ten years) cause social problems, and unrest.

[mickeyd]

The CPI-Chained proposition is just another in a string of government take-backs that most military retirees already are living with (Tricare,TFL, medicare etc).

BOHICA folks.

[heirloom]

Quote:

It's underfunded & something needs to be done. Believe gradually raising ages from 62 & 67 to 65 & 70 is right to do too. Afterall, we're living way longer than when this program started. If you get disabled between 62 & 65, still covered by disability payments.

+1

Plus the middle class income isn't increasing, so their SS contribution stays the same while more people are retiring.

I don't think there should be a max contribution. As long as you work you should have FICA taxes withdrawn, no matter how much you make.

[JPatrick]

Quote:

Originally Posted by foxfirev5 Looks like about a 1100 -1200 hit per year for me. Not a huge deal but if the hits keep coming....

And that's just the problem..The hits will keep on coming in the form of state taxes, sales taxes and means testing on medicare to name only three.