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

[SecondAttempt]

Right now it looks like 50/50 or worse possibility. I hear that Amtrak is canceling long trips due to likelihood of a strike. I believe Congress can theoretically intervene but I don't see that happening ahead of an election but I'm a resident pessimist so YMMV.

Obviously the news is out - no strike. But I think the actions of Amtrak and clearing the system of hazardous good were more pragmatic than predictive.

 

[SecondAttempt]

If we see inflation similar to that of the 70s and 80s the SS increase will seem like nothing much. In fact people who think they have ”won the game” may find out the game was never over. It was just a very long time out.

I read a book a long time ago by some guy named Paul Volker. He blamed the 1970s inflation on going off the gold standard and finally accounting for the massive costs of the US military presence in Europe. Those were two massive shocks. I know everyone blames the oil embargo but Volker did not agree.

The current situation has a few potential drivers - covid and massive spending+economic shutdown, supply chain disruptions that are ongoing (I know most consumer goods are flowing now but I am still working and I will tell you that industrial products are still ridiculous with lead times over 6 months or even indefinte being common. I waited over 6 months recently for about 100 feet of conduit!) and the price of oil because of Russia. These will all work their way through although I do expect it to take a few years. After that I think we will see inflation down around 2% again.

 

[Koolau]

I read a book a long time ago by some guy named Paul Volker. He blamed the 1970s inflation on going off the gold standard and finally accounting for the massive costs of the US military presence in Europe. Those were two massive shocks. I know everyone blames the oil embargo but Volker did not agree.

The current situation has a few potential drivers - covid and massive spending+economic shutdown, supply chain disruptions that are ongoing (I know most consumer goods are flowing now but I am still working and I will tell you that industrial products are still ridiculous with lead times over 6 months or even indefinte being common. I waited over 6 months recently for about 100 feet of conduit!) and the price of oil because of Russia. These will all work their way through although I do expect it to take a few years. After that I think we will see inflation down around 2% again.

Volker was good, but ignoring the 70's oil shock(s) in inflation would seem to be just wrong. YMMV

 

[copyright1997reloaded]

Just a reminder that we are one week away (10/13/22 @ 8:30AM) from the release of September CPI data.

As Gumby has mentioned, as of last month we were at 8.7% for the social security increase in 2023. The final number may be higher or lower based on the Sept. CPI #'s.

[-]Stealing[/-] Using the formula Gumby posted:

Avg CPI 3Q22/Avg CPI 3Q21 = ((CPI Jul22 + CPI Aug22 + CPI Sep22)/3)/((CPI Jul21 + CPI Aug21 + CPI Sep21)/3)

((292.219 +291.629+291.629*)/3)/268.421 = 1.08719 = 8.7% increase

* Assumed, i.e. "if there are no further changes in September."

It would require a Sept CPI value of 294.54529 to get us to 9%.

 

[Gumby]

Just a reminder that we are one week away (10/13/22 @ 8:30AM) from the release of September CPI data.

As Gumby has mentioned, as of last month we were at 8.7% for the social security increase in 2023. The final number may be higher or lower based on the Sept. CPI #'s.

[-]Stealing[/-] Using the formula Gumby posted:



It would require a Sept CPI value of 294.54529 to get us to 9%.

For those who are following along at home, remember to look at CPI-W for social security, not CPI-U

 

[Accidental Retiree]

For those who are following along at home, remember to look at CPI-W for social security, not CPI-U

I don’t even bother. I wait for the Gumby Report.

 

[jollystomper]

I don’t even bother. I wait for the Gumby Report.

+1000, more accurate than anything in the media!

 

[braumeister]

FWIW, military retired pay gets its COLA from the same formula as Social Security. I like this page (updated monthly) which shows it graphically:

MOAA COLA Watch

 

[Unpaintedhuffhines]

I'm recently retired, but a long time (almost 9 years) from collecting SS. I go in periodically to ssa.gov to check things and validate my benefit.

My question is: whatever the COLA ends up being, does anyone know when will it be reflected in the SSA website benefit amounts table?

 

[Gumby]

I'm recently retired, but a long time (almost 9 years) from collecting SS. I go in periodically to ssa.gov to check things and validate my benefit.

My question is: whatever the COLA ends up being, does anyone know when will it be reflected in the SSA website benefit amounts table?

How old are you now?

 

[SecondCor521]

I'm recently retired, but a long time (almost 9 years) from collecting SS. I go in periodically to ssa.gov to check things and validate my benefit.

My question is: whatever the COLA ends up being, does anyone know when will it be reflected in the SSA website benefit amounts table?

Not sure. I'm 53, and my predicted benefit amount usually goes up sometime in the spring (Feb/Mar). The dollar change doesn't really make much difference in the big scheme of things for me, but that's because SS is a small part of the picture in my case.

 

[Unpaintedhuffhines]

How old are you now?

61. Plan to take SS at 70.

 

[MikeWillRetire]

I am 60 years old, and I am planning my retirement. Using the SS website calculator, my benefit at age 62 will be $24k. Can I assume that this estimated benefit will also increase using the same COLA?

 

[Gumby]

61. Plan to take SS at 70.

I believe, subject to correction by others who may know more, that your Primary Insurance Amount will increase by the amount of the announced COLA for any year in which you are 62 or older, but not for the year you turn 61. You can then calculate your age 70 benefit by using the 8% per year adjustment for delaying receipt past your full retirement age.

I am 60 years old, and I am planning my retirement. Using the SS website calculator, my benefit at age 62 will be $24k. Can I assume that this estimated benefit will also increase using the same COLA?

No, because your PIA is calculated the year you turn 60 based on your average indexed monthly earnings which are indexed to the national average wage index, not the CPI-W. There is no COLA the year you turn 61. Then, starting the year you turn 62, your PIA is increased by that year's COLA and then your actual benefit is the PIA decreased by the ~6% per year penalty if you take benefits early.

 

[copyright1997reloaded]

There is no COLA the year you turn 61.

I had forgotten about this. While it doesn't impact me (older), this is a big hit on those who are 61 this year.

 

[SomedaySoon]

I'm recently retired, but a long time (almost 9 years) from collecting SS. I go in periodically to ssa.gov to check things and validate my benefit.

My question is: whatever the COLA ends up being, does anyone know when will it be reflected in the SSA website benefit amounts table?

Well for the last four years I've checked the last week of November and my SS statement is usually updated with the new updated benefit amounts. If not, wait a week and it should be by then......

 

[W2R]

I am so excited about this year's SS COLA!!! Even if it turned out to be much smaller than expected, I think I'll still be really happy.

Well, as long as it's more than a buck; I do have my limits. But $1.95 or more extra every month for the rest of my life, for doing absolutely nothing but continuing to breathe? Now that sounds pretty doggone nice to me.

 

[aja8888]

I am so excited about this year's SS COLA!!! Even if it turned out to be much smaller than expected, I think I'll still be really happy.

Well, as long as it's more than a buck; I do have my limits. But $1.95 or more extra every month for the rest of my life, for doing absolutely nothing but continuing to breathe? Now that sounds pretty doggone nice to me.

W2R, I think you should plan on the 1.95/month covering a bit more than just breathing, like food and other bills. Heck, my house/car insurance went up 25% for the coming year and that was after going down to one car and raising deductibles. And I shopped it pretty hard.

 

[Finance Dave]

I am so excited about this year's SS COLA!!! Even if it turned out to be much smaller than expected, I think I'll still be really happy.

Well, as long as it's more than a buck; I do have my limits. But $1.95 or more extra every month for the rest of my life, for doing absolutely nothing but continuing to breathe? Now that sounds pretty doggone nice to me.

Wondering...

Would you rather have 1% inflation and get a 1% SS increase?

Or have 9% inflation and have a 9% SS increase?

I'm sure it would depend on which inflation number I'm talking about, but it's more of a hypothetical question. In theory, shouldn't matter. I guess if you're a net saver, might be good to have the bigger numbers.

 

[marko]

Wondering...

Would you rather have 1% inflation and get a 1% SS increase?

Or have 9% inflation and have a 9% SS increase?

I'll take the 9% increase locked in "forever" with the expectation of inflation going down over time.

 

[gauss]

I have non-COLA corporate pensions. I think the 1% figure would be best for me.

-gauss

 

[Golden sunsets]

FWIW, military retired pay gets its COLA from the same formula as Social Security. I like this page (updated monthly) which shows it graphically:



MOAA COLA Watch

And Federal Retiree CSRS pensions.

 

[teejayevans]

I'll take the 9% increase locked in "forever" with the expectation of inflation going down over time.

If inflation goes down, that’s not deflation, just smaller increases.

BTW, the tax limits on SS don’t adjust with inflation, so you’ll be paying more in taxes. Ditto for AMT I think.

 

[RetiredHappy]

If inflation goes down, that’s not deflation, just smaller increases.

BTW, the tax limits on SS don’t adjust with inflation, so you’ll be paying more in taxes. Ditto for AMT I think.

It does adjust with inflation in that SS benefits are subject to taxes up to a maximum of 85% of the benefits. IRS tax brackets are adjusted for inflation every year.

 

[USGrant1962]

It does adjust with inflation in that SS benefits are subject to taxes up to a maximum of 85% of the benefits. IRS tax brackets are adjusted for inflation every year.

You are missing TJs point - the AGI levels at which 0% or 50% or 85% of SS benefits are taxed are NOT indexed to inflation. So more people are taxed on 50% or 85% every year even though their SS is worth the same, accounting for inflation.