Social Security Benefits Could Get Their Biggest Boost in 40 Years.

[Katsmeow]

I'm thrilled to hear that. I'm sure that will be more than the annual Medicare rate increase and the income taxes I have to pay on most of the SS I receive.

I am sure it will also. I get $29196 a year in SS now. A 7.3% increase would be $2131 a year. If the medicare premium went up 7.3% that would be about $149 a year. We are usually in the 12% bracket and the increase in SS would add about $100 in taxes for me.

So it looks like my "net" increase would be about $1882 a year which I would happily take. FWIW, the increase will probably be more than the 7.3% because I don't think inflation will be zero through the relevant time period (although it will probably slow).

 

[teejayevans]

Correct. COLAs do not apply until the year you turn 62.

It’s the wage index that does, so wages are going up as well, expect a similar bump in projected SS if not 62 yet.

 

[Exchme]

Folks celebrating are either joking around or have never have done a retirement calculation. While it's nice that part of your income is inflation protected, inflation sucks.

Nominal bonds, non-COLA pensions and non-COLA annuities get crushed, you pay capital gains taxes on the phantom gains of inflation, parts of the tax code like NIIT and the taxable thresholds for SS are not indexed to inflation. The government adjustments that do take place lag by a year vs. when you experienced the inflation, so you are always behind the curve.

 

[corn18]

Folks celebrating are either joking around or have never have done a retirement calculation. While it's nice that part of your income is inflation protected, inflation sucks.

Nominal bonds, non-COLA pensions and non-COLA annuities get crushed, you pay capital gains taxes on the phantom gains of inflation, parts of the tax code like NIIT and the taxable thresholds for SS are not indexed to inflation. The government adjustments that do take place lag by a year vs. when you experienced the inflation, so you are always behind the curve.

All of that is true, but my model likes an 8.6% increase in my COLA pension very much. And so does my mortgage payment.

 

[W2R]

Without asking anybody's permission or caring one iota about what anyone thinks of me for saying this.....

.... I am totally thrilled at the possibility of getting a 7.3% raise in my SS bank deposits each month! $143.09 more coming my way each month, just for breathing!

​

I got my usual SS payment a week ago, and like EVERY month it was such a joyous surprise that caught me off guard. Even after all these years I forget to expect the monthly SS deposit in my checking account. It's one of the coolest things about being retired (other than having oceans of free time to do whatever I want to do). Christmas morning once a month.

 

[ShokWaveRider]

DW's came a few days early this month. It was a real surprise.

 

[aja8888]

DW's came a few days early this month. It was a real surprise.

SS has an online calendar that shows the dates various SS programs pay out.

go here: https://www.ssa.gov/pubs/EN-05-10031-2022.pdf

 

[Dtail]

Could be decently less than 7.3% if inflation is somewhat under control in the 3 month decision period and all the prior inflation still effectively stays with most products.

 

[Magus]

Could be decently less than 7.3% if inflation is somewhat under control in the 3 month decision period and all the prior inflation still effectively stays with most products.

 

[corn18]

Could be decently less than 7.3% if inflation is somewhat under control in the 3 month decision period and all the prior inflation still effectively stays with most products.

That's not really how it works.

The COLA is determined from the arithmetic mean of the Jul/Aug/Sep CPI-W from 2022 vs. 2021. 2021 mean was 268.421. CPI-W for May 2022 was 288.022. Let's say that inflation is zero for Jun/Jul/Aug/Sep 2022. The mean CPI-W for Jul/Aug/Sep 2022 would be 288.022. So the COLA would be 7.3%. Do you think we will have deflation between now and Oct 2022? Not sure how that could even be possible, but stranger things have happened.

 

[Koolau]

Any info yet on how much of our SS "windfall" will be taken by next-year's increased MC "participation?"

 

[RunningBum]

Folks celebrating are either joking around or have never have done a retirement calculation. While it's nice that part of your income is inflation protected, inflation sucks.

I don't think people are cheering for inflation so they get a larger SS benefit. Inflation is happening. I think people are cheering that the index that SS increases are based on reflect this, and result in an SS increase. I've heard concerns before that the index doesn't measure inflation well so SS increases lag inflation.

It's kind of like if someone ran into your car and totaled it, and then their insurance gave you a check at a very fair price for your car. You celebrate getting that check, not because having your car wrecked was good, but because their insurance didn't short you on the value of your car.

 

[finnski1]

I don't think people are cheering for inflation so they get a larger SS benefit. Inflation is happening. I think people are cheering that the index that SS increases are based on reflect this, and result in an SS increase. I've heard concerns before that the index doesn't measure inflation well so SS increases lag inflation.

It's kind of like if someone ran into your car and totaled it, and then their insurance gave you a check at a very fair price for your car. You celebrate getting that check, not because having your car wrecked was good, but because their insurance didn't short you on the value of your car.

good analogy.

 

[wrigley]

I recently got a "truckette", a Ford Maverick Hybrid. I've been averaging 42 MPG so far.

As a result, my F150 isn't being used as much.

I saw the first Maverick in a parking lot the other day. I honestly thought it was Honda Ridgeline at first. Not a bad looking little truck.

Mike

 

[copyright1997reloaded]

I saw the first Maverick in a parking lot the other day. I honestly thought it was Honda Ridgeline at first. Not a bad looking little truck.

Mike

I'm very happy with mine (so far), especially as I was able to get it 4% under invoice AND not subject to Ford's December 21 price increase. Long story short - dealer was trying to get a big order bank (so that they could get additional stock allocations). Now almost all dealers have significant mark ups and the "used" ones are going for way over list.

My only mistake in this process was going for the Lariat vs. the low end XL. I say this laughingly because w/the Lariat I want to keep it vs. flipping an XL (which I might not like as much) and the % uplift on the XL's is greater because of their lower price. Ha ha, I like it so much I am keeping it (no, I do not NEED to have FOUR vehicles ).

For example, cars.com has this XL listed from Carvana for $38,990 w/256 miles. https://www.cars.com/vehicledetail/48f4cab9-6788-4568-9d6c-ce89ab483ee5/The MSRP on this vehicle was $22,140, see attached window sticker for that vin (which I looked up).

My loaded Lariat was just over $30K (plus state taxes/registration) on a $33+K MSRP (sticker price).

 

[Graybeard]

IMO it would be better to not get a COLA in SS because that should mean there is no inflation. Naturally, with inflation the COLA helps offset the inflation. We have been spoiled for the past 12 years.

 

[Koolau]

IMO it would be better to not get a COLA in SS because that should mean there is no inflation. Naturally, with inflation the COLA helps offset the inflation. We have been spoiled for the past 12 years.

Yeah, definitely better to have no COLA due to no inflation. My modest pension has no COLA, so inflation really hurts - even though my SS is "covered." Of course, my COLAd SS is taxed that much more, so there's that! And MC probably has another increase waiting in the wings. YMMV

 

[Katsmeow]

And MC probably has another increase waiting in the wings. YMMV

Does MC mean Medicare? AS others have mentioned I don't expect a Medicare premium increase. They increased it too much this year based upon that Alzheimer's drug. Rather than reduce next year I suspect they just won't increase it. The deductible will probably increase. However, even if both the deductible and premium increased that amount would be trivial in comparison to the overall SS increase.

 

[Koolau]

Does MC mean Medicare? AS others have mentioned I don't expect a Medicare premium increase. They increased it too much this year based upon that Alzheimer's drug. Rather than reduce next year I suspect they just won't increase it. The deductible will probably increase. However, even if both the deductible and premium increased that amount would be trivial in comparison to the overall SS increase.

I guess I'm just wondering: If our food, clothing, fuel, entertainment, stuff have gone up an average of 10%, wouldn't medical costs go up at least 10% - maybe more? I know that MC rates are actually negotiated (heh, heh, at the point of a gun, more or less) and not all increases make it to MC approved charges.

Hope everyone is right about MC not going up. YMMV

 

[Dtail]

That's not really how it works.

The COLA is determined from the arithmetic mean of the Jul/Aug/Sep CPI-W from 2022 vs. 2021. 2021 mean was 268.421. CPI-W for May 2022 was 288.022. Let's say that inflation is zero for Jun/Jul/Aug/Sep 2022. The mean CPI-W for Jul/Aug/Sep 2022 would be 288.022. So the COLA would be 7.3%. Do you think we will have deflation between now and Oct 2022? Not sure how that could even be possible, but stranger things have happened.

Ah forgot how the formula works.

 

[Katsmeow]

I guess I'm just wondering: If our food, clothing, fuel, entertainment, stuff have gone up an average of 10%, wouldn't medical costs go up at least 10% - maybe more? I know that MC rates are actually negotiated (heh, heh, at the point of a gun, more or less) and not all increases make it to MC approved charges.

Hope everyone is right about MC not going up. YMMV

I mean normally I think it would go up. But they already said they overshot the mark for this year so I am thinking it will probably balance out. But, let's say it didn't and Part B premiums went up 10%. That would be $17 a month. That is only a tiny fraction of what my SS payment will go up as projected so not a problem anyway.

 

[Teacher Terry]

Die to WEP I have a small SS. The increase in Part B premiums took every penny of my raise last year.

 

[Katsmeow]

Die to WEP I have a small SS. The increase in Part B premiums took every penny of my raise last year.

Well, yes, of course that happens to people in your situation. But, it isn't typical. For someone with just the average SS a 10% increase in Medicare premiums this year would be trivial. And, I would wager that most of the people in this forum receive above average SS, some significantly above average. Are their exceptions? Sure. But that doesn't change the point I (and others) made.

 

[cyber888]

It's about time SS gets a big boost - many retirees will not survive this kind of inflationary pressure as they depend mostly on SS income. I know some who depend mostly on SS. Inflation will eat into their budget.

 

[Koolau]

It's about time SS gets a big boost - many retirees will not survive this kind of inflationary pressure as they depend mostly on SS income. I know some who depend mostly on SS. Inflation will eat into their budget.

It's fortunate that those of us who planned for FIRE did not completely depend on SS - in fact, many of us assumed (wrongly, so far) that SS would not be there for us. For me, SS is my gravy, but the meat and potatoes is what I set aside by LBYM all those years. (Not that I don't want my 10% SS increase!) YMMV