Originally Posted by thefinancebuff
From the first paragraph of the wage base page:
So it seems they do have something to do with one another.
Here's the law:
Social Security Act §230
The formula is basically:
wage base for next year = AWI for previous year / AWI for 1992 * 60,600
Then there's some rounding to nearest $300.
The formula works quite well between 2003 and 2009 (using AWI 2001-2007) but it breaks down in 2010. According to the formula the wage base should go up to $109,200 but it was held constant at $106,800. Same for 2011. Maybe it has something to do with no COLA in those two years. So the "wrong" wage base threw me off.
You can believe whatever you want to believe, and perhaps you do have some convoluted method for making the numbers come out even.
I just want to emphasize that the only percent changes that matter, are the ones listed in the AWI table. And they're only updated in October. You won't see a figure for 2011 until next October. If it turns out to be 3.1%, then you must be either a math wizard or a fortune teller.
The most up to date AWI is for 2010, and it's 2.36%. Any figures for the 2011 AWI are strictly speculative. Between now and January 1, all future SS recipients who are under 62, and have no new earnings, should multiply their current benefit estimate by 2.36%. Save that result until January, and then get a new estimate off the SSA site. The numbers will match-up. I've been doing it since SSA started a website, and it's never been wrong.