Re: Heard an Interesting Interview on SS today....
I visited the social security administration web site today and happened to remember this thread so I figured I would look up what they had to say. I was surprised at how clearly they described the COLA and Average Wage Index. Here's some excerpts:
Indexing earnings - When indexing an individual's earnings for benefit computation purposes, one must first determine the year of first eligibility for benefits. For retirement, eligibility is at age 62. If a person retires at age 62 in 2004, for example, then 2004 is the person's year of eligibility. An individual's earnings are always indexed to the average wage level 2 years prior to the year of first eligibility. Thus, for a person retiring at age 62 in 2004, the person's earnings would be indexed to the average wage index for 2002, or $33,252.09. Earnings in a year before 2002 would be multiplied by the ratio of $33,252.09 to the average wage index for that year; earnings in 2002 or later would be taken at face value.
National average wage index series:
Year Index
1951 $2,799.16
1952 2,973.32
1953 3,139.44
1954 3,155.64
1955 3,301.44
1956 3,532.36
1957 3,641.72
1958 3,673.80
1959 3,855.80
1960 4,007.12
1961 4,086.76
1962 4,291.40
1963 4,396.64
1964 4,576.32
1965 4,658.72
1966 4,938.36
1967 5,213.44
1968 5,571.76
1969 5,893.76
1970 6,186.24
1971 $6,497.08
1972 7,133.80
1973 7,580.16
1974 8,030.76
1975 8,630.92
1976 9,226.48
1977 9,779.44
1978 10,556.03
1979 11,479.46
1980 12,513.46
1981 13,773.10
1982 14,531.34
1983 15,239.24
1984 16,135.07
1985 16,822.51
1986 17,321.82
1987 18,426.51
1988 19,334.04
1989 20,099.55
1990 21,027.98
1991 $21,811.60
1992 22,935.42
1993 23,132.67
1994 23,753.53
1995 24,705.66
1996 25,913.90
1997 27,426.00
1998 28,861.44
1999 30,469.84
2000 32,154.82
2001 32,921.92
2002 33,252.09