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Originally Posted by MasterBlaster
Telly:
What was your point in posting this ?
This trend of wages outpacing inflation has been going on pretty much for decades.
the SS cola has always been tied to the CPI not wages.
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A couple reasons, MB.
People who are really and actually ER'd have no new $ coming into their SS account, except by the yearly Wage Indexing of their previous wages. Each year's increased Wage Index increases what their benefit will be in the future. I can look at the new Average Wage Index, and compute the %increase from the year before. I can then multiply the new WI percentage times my last-year's special SS statement, for example, and see how much my @62 and @66 benefit amounts have now gone up.
In my spreadsheets, I have assumed/projected that WI would be less than CPI. But at every year's release of new data before age 60, I update the spreadsheet to the real number.
I still whack an arbitrary amount (now 27%) right off the top of benefits for possible future reductions in SS, but every year's new WI increases the base amount before the whack. Which is good.
Another reason is the talk of a couple years ago about changing SS Wage Indexing to a value the same as the CPI, instead of the present inflation of wages method. Historically, WI% has been higher than CPI/COLA%. But not always. Earlier in this decade, WI had fallen below CPI!
Of course, I want to see WI > CPI.
Linear Mode
