SS Monthly estimation increased a bit from last year

[fh2000]

I used the same values for SS calculator and see a little increased result this year.

Retirement age: 57. Start benefit at 62.
Last year, I got $1531/month. Now I run again, and I get $1607/month. A $76 increase monthly. I assume this is due to CPI adjustment?

 

[Alan]

I used the same values for SS calculator and see a little increased result this year.

Retirement age: 57. Start benefit at 62.
Last year, I got $1531/month. Now I run again, and I get $1607/month. A $76 increase monthly. I assume this is due to CPI adjustment?

Actually I think it increases by the wages index until age 62 then increases by CPI after that. I may be wrong but I'm sure others will correct me.

 

[heirloom]

I think Alan is right...we only got a 1.7% increase this year.

 

[eytonxav]

I believe Alan to be correct. I got a bit of a shock a few years ago before I turned 62 when I saw my year over year benefit actually go down, and that was due to the wage index which actually decreased that year. That is one of the consequences of a lousy economy where wages are stagnant or down. Let's hope the recovery continues and we do not see any more of that going forward, but since I'm past 62 it won't be a factor for me.

 

[fh2000]

Thanks, guys. It is not free money looks like:

"The increase in the wage base will mean higher taxes for about 10 million of the 163 million workers who pay Social Security tax. How much more depends on whether a temporary payroll tax cut expires at the end of this year as scheduled.

The tax cut reduced the employee’s share of Social Security tax by 2 percentage points — to 4.2 from 6.2 percent — in 2011 and 2012. (The employer’s share remained at 6.2 percent.)

A worker earning at or above the wage base ($100,100 this year) saved $2,202.

Assuming the tax cut expires, the maximum Social Security tax will jump to $7,049.40 next year ($113,700 at 6.2 percent) from $4,624.20 this year ($110,100 at 4.2 percent).

Employers will pay an additional $223.20 for workers at or above the wage base."



Social Security payments to rise 1.7%, but wage base jumps 3.3% | Kathleen Pender – Net Worth Plus | an SFGate.com blog

 

[HighRoller]

I'll start collecting SS this year and had just re-run the numbers. I saw an increase from last year too. Not that much of an increase but I feel any return helps recover what I was forced to pay into the program all these years.

 

[ziggy29]

If I understand it right, this means that those who aren't getting SS yet "should" (under current law) expect to see their future benefits adjusted upward 3.3% while those receiving it now get a COLA of 1.7%. But it also means the earned income subject to SS taxes rises 3.3%, so it's not really a "free lunch" for those not yet collecting (even before considering the reforms likely to come at the expense of workers under 50-55).

Eliminating the 3.3% increase in future benefits (but keeping the 3.3% higher wage base) is one of the ideas being floated for keeping SS solvent. That said, wages outpacing inflation is a pretty new phenomenon over the last 5-6 years, and this proposal only helps "save" SS when wages are outpacing inflation.

 

[W2R]

Actually I think it increases by the wages index until age 62 then increases by CPI after that. I may be wrong but I'm sure others will correct me.

This is my understanding, as well. The change in method of computing increases doesn't depend on whether you are working or not; what matters is whether you are a certain age yet or not.