Social Security estimates and COLA

[gamer-stu]

Hi, I think this is probably a stupid question. But... I'm using the Social Security retirement benefits estimator to work out my benefits at 67 and 70 if I were to stop working now. The question is this: these estimates are in "today's" dollars and, as I approach retirement, I should expect this amount to increase to account for COLA, right? Or does COLA only apply once you become retired. I.e., my estimate now will be my estimate then?

 

[gamer-stu]

Hi, I think this is probably a stupid question. But... I'm using the Social Security retirement benefits estimator to work out my benefits at 67 and 70 if I were to stop working now. The question is this: these estimates are in "today's" dollars and, as I approach retirement, I should expect this amount to increase to account for COLA, right? Or does COLA only apply once you become retired. I.e., my estimate now will be my estimate then?

And of course, right after I posted this, I found the answer. It appears that COLA will adjust the estimate over time, per this from the SS site, 3rd bullet...

We can’t provide your actual benefit amount until you apply for benefits. And that amount may differ from the retirement estimates because:

- Your earnings may increase or decrease in the future.
- You may continue to work after your benefits start.
- Your actual benefits will be adjusted for cost-of-living increases.
- Your estimated benefits are based on current law. The law governing benefit amounts may change. Congress has made changes to the law in the past and can do so at any time.
- Your benefit amount may be affected by military service, railroad employment or pensions earned through work on which you did not pay Social Security tax.
- Your estimated benefits do not include Medicare premiums or other amounts that may be deducted from your benefit.
- Your estimated benefits do not include any Social Security benefits you may be eligible on the record of your current, divorced, or deceased former spouse.

 

[JustCurious]

Hi, I think this is probably a stupid question. But... I'm using the Social Security retirement benefits estimator to work out my benefits at 67 and 70 if I were to stop working now. The question is this: these estimates are in "today's" dollars and, as I approach retirement, I should expect this amount to increase to account for COLA, right? Or does COLA only apply once you become retired. I.e., my estimate now will be my estimate then?

The answer is a bit more complex than a simple yes or no because your earnings are wage index adjusted until age 60 by reference to the national average wage index (not price inflation) and then your benefit is adjusted by the CPI-W (price inflation) from that point forward. Also, the COLA applies regardless of when you retire.

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=191098

 

[bingybear]

yes, they can't apply the COLA to your benefits since they don't know what the COLA will be years in advance.

 

[gamer-stu]

Ok, thank you both!

 

[braumeister]

And of course, right after I posted this, I found the answer.

I wish I had a nickel for every time that has happened to me.