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Old 05-27-2020, 04:39 AM   #41
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Originally Posted by audreyh1 View Post
Did someone already post this SS AWI table which goes though 2018?
https://www.ssa.gov/oact/cola/awidevelop.html
There was a decrease in 2009, which would follow the same concept for this year.
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Old 05-27-2020, 06:45 AM   #42
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Thank you Perryinva, for your excellent explanations of how this all works. It is a complicated subject, and you have done a great service for the membership by making it understandable.
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Old 05-27-2020, 06:48 AM   #43
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Originally Posted by Dtail View Post
There was a decrease in 2009, which would follow the same concept for this year.
Yes, that table shows exactly what happened in 2009.
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Old 05-27-2020, 01:34 PM   #44
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There was a decrease in 2009, which would follow the same concept for this year.
Yes, but 2020's drop is expected to be significantly larger than the one in 2009.

2017 $50,321.89
2018 $52,145.80 +3.62%
2019 estimate* $53,836 +3.24%
2020 orig estimate* $56,396 +4.75%, new estimate $50,171 -6.8%

The new 2020 estimated AWI is less than the 2017 AWI. The 2009 decrease was -1.51% and the final value was still higher than the 2007 AWI, so it only set back that year's cohort by one year. We're looking at three years for the 2020 group.

*estimates above from the 2019 SS Trustees report.
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Old 05-28-2020, 04:18 PM   #45
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Yes, but 2020's drop is expected to be significantly larger than the one in 2009.



2017 $50,321.89

2018 $52,145.80 +3.62%

2019 estimate* $53,836 +3.24%

2020 orig estimate* $56,396 +4.75%, new estimate $50,171 -6.8%



The new 2020 estimated AWI is less than the 2017 AWI. The 2009 decrease was -1.51% and the final value was still higher than the 2007 AWI, so it only set back that year's cohort by one year. We're looking at three years for the 2020 group.



*estimates above from the 2019 SS Trustees report.

https://www.google.com/url?sa=t&rct=...ric90rKUFXEtk8

Social Security's benefit formula is indexed for the growth of average wages in two ways, producing permanent benefit reductions when average wages drop substantially for Americans nearing retirement. Due to the Coronavirus-induced recession, Social Security's Average Wage Index will fall in 2020, resulting in 13 percent lower annual retirement benefits for individuals born in 1960 compared to what the 2019 Social Security Trustees Report projected.

Policymakers can enact ad hoc changes to the Social Security benefit formula to counteract these benefit cuts. Nevertheless, a more comprehensive reform would replace the wage-indexed career-average earnings in the Social Security benefit formula with inflation-indexed career-average earnings, coupled with an increase in the 90, 32, and 15 percent bend points to maintain the dollar level of benefits. Inflation-indexed earnings are more closely tied to workers' retirement planning goals, and a Social Security benefit formula using price-indexed earnings would be far less prone to imposing large benefit cuts due to a sudden decline economywide average earnings.
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Old 05-28-2020, 04:30 PM   #46
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Due to the Coronavirus-induced recession, Social Security's Average Wage Index will fall in 2020
That's a reasonable guess.

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resulting in 13 percent lower annual retirement benefits for individuals born in 1960 compared to what the 2019 Social Security Trustees Report projected.
As for specific numbers, as the linked article notes, "[c]learly these assumptions embody extreme uncertainty."
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Old 05-28-2020, 08:36 PM   #47
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I was born in 1961. Retired last year. Will this affect me?
If the unemployment continues into 2021 it could. Would be the same reasons.
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Old 05-28-2020, 10:03 PM   #48
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Refresh my memory, isn’t 1960 the first year that full retirement age was 67?
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Old 05-28-2020, 10:18 PM   #49
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Refresh my memory, isnít 1960 the first year that full retirement age was 67?
Yes. 66 for those born in 1954 or earlier, then increasing by two months in each subsequent birth year. No full retirement age greater than age 67 at this time.
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Old 05-29-2020, 12:07 AM   #50
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If the average wage index is total wages / workers then what matters is are high paying jobs or low paying jobs disappearing? If low paying jobs are disappearing then the average wage would increase, even though the number of jobs is decreasing. I think they said the lowest paid jobs got hit worst, so the average should go up. But what do I know.
I dunno either.

I'm thinking professional athletes (baseball, basketball, football, hockey), singers, actors, company executives are all going to be taking a big pay cut this year.
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Old 05-29-2020, 08:21 AM   #51
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Does this mean when the national average salary is calculated for 2020 that the social security statements that have been sent out for those who turn 60 this year will have been wrong, and that the new statements will show the downward adjustment?
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Old 05-29-2020, 09:23 AM   #52
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Does this mean when the national average salary is calculated for 2020 that the social security statements that have been sent out for those who turn 60 this year will have been wrong, and that the new statements will show the downward adjustment?
(Are they still sending statements out? I thought you had to get them online nowadays.)

Yes, any number you get from the SSA before age 62 is an estimate. All these future numbers are "wrong" by some amount, but the number for those born in 1960 is currently wrong by a much larger amount than is typical.

Nobody knows if or when SS will start using a different estimated AWI in their calculations for this age group, so it's impossible to say when a new statement would show the lower benefits. If they use info from the next trustees report, that will be April 2021, or if they wait for the actual 2020 AWI to be calculated, that will be November 2021.
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Old 05-29-2020, 09:36 AM   #53
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It would be interesting if people who are 60 this year could make a note of what their SS statement estimates their benefit to be, and report back on any notable decreases because of a reduced AWI for 2020.
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Old 05-29-2020, 09:39 AM   #54
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It would be interesting if people who are 60 this year could make a note of what their SS statement estimates their benefit to be, and report back on any notable decreases because of a reduced AWI for 2020.
#1 yes, I would like to see that information
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Old 05-29-2020, 09:41 AM   #55
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It would be interesting if people who are 60 this year could make a note of what their SS statement estimates their benefit to be, and report back on any notable decreases because of a reduced AWI for 2020.
I will volunteer, as I look at the SS website every year when the numbers are adjusted at the end of the year.
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Old 05-30-2020, 12:37 PM   #56
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Here is a financial blog post that I found helpful in understanding the math:
https://financialducksinarow.com/140...-never-forget/
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Old 06-01-2020, 02:29 PM   #57
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It would be interesting if people who are 60 this year could make a note of what their SS statement estimates their benefit to be, and report back on any notable decreases because of a reduced AWI for 2020.
I can check, too. When would we see the change?

I generally pull the numbers about once a year. I could look again in 2021 and see if it went down. Or would it already be reflected?
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Old 06-01-2020, 02:48 PM   #58
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One of us turns 60 this year.

We will stop all charitable contributions.

This will more than make up for any future decrease in benefits.

Problem solved.
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Old 06-01-2020, 06:47 PM   #59
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I am a 1960 model too. This is just great.

I am assume we have people on this message board that turned 60 during the worst of the 2008-2009 downturn. Any testimonials on how their social security was impacted?
SSA.gov has an AWI chart, it doesnít appear the Great Recession had as severe an impact as what is projected for us 1960 kids.
https://www.ssa.gov/oact/cola/AWI.html
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Old 06-02-2020, 04:07 PM   #60
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Whew! Born late November 1959. Made it by 5 weeks!
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