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Old 07-24-2021, 01:46 PM   #41
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I don’t think Medicare premium increases are based on inflation statistics like SS but rather on the actual cost of the program.
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Old 07-24-2021, 06:17 PM   #42
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Originally Posted by Crabby Mike View Post
No, prices would actually have to drop, not just rise more slowly, for that to happen. The CPI-W for June was already more than 5% above the 3Q 2020 average. If inflation stopped in its tracks for the next 3 months, we'd already have a 5%+ COLA. I assume the higher estimates are based on 3 more months of inflation at recent rates.

June has nothing to do with the SS COLA. The SS COLA is calculated on the July, August, and September CPI-W. What happens during the other 9 months of the year does not figure into the calculation. The June CPI certainly could be somewhat of a predictor for the following months, but it is not used in determining the SS COLA which will be announced on Oct 13 because that is when the third piece (the September CPI) is published.
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Old 07-24-2021, 06:24 PM   #43
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June has nothing to do with the SS COLA. The SS COLA is calculated on the July, August, and September CPI-W. What happens during the other 9 months of the year does not figure into the calculation. The June CPI certainly could be somewhat of a predictor for the following months, but it is not used in determining the SS COLA which will be announced on Oct 13 because that is when the third piece (the September CPI) is published.
Umm read Crabby Mike's response again. He realizes what you are saying.
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Old 07-24-2021, 07:32 PM   #44
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I agree if inflation stays at 5% for July, August and September that the SS COLA will be 5%. But it would be because of the inflation in those 3 months and has nothing to do with June.
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Old 07-25-2021, 07:35 AM   #45
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I agree if inflation stays at 5% for July, August and September that the SS COLA will be 5%. But it would be because of the inflation in those 3 months and has nothing to do with June.
Agree and my interpretation is that Crabby Mike understands that statement.
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Old 07-25-2021, 07:43 AM   #46
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I wouldn't be so excited about high inflation. While your social security may or may not keep up with it, if any of your cash flow comes from non-cola pensions or from draws on a high fixed income portfolio, you will almost certainly fall behind.
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Old 07-25-2021, 07:59 AM   #47
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I wouldn't be so excited about high inflation. While your social security may or may not keep up with it, if any of your cash flow comes from non-cola pensions or from draws on a high fixed income portfolio, you will almost certainly fall behind.
Well wouldn't it work better if rates were raised in an inflationary concept too?
I realize with the govt's large debt, it doesn't seem likely to have interest rates anywhere near the 70's level, where you could lock in a long dated investment with a 10% plus rate which lasted much longer than the high inflation rates.
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Old 07-25-2021, 08:18 AM   #48
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Well wouldn't it work better if rates were raised in an inflationary concept too?
That would probably be counterproductive, lead to economic slowdown or even recession, and ironically make the real debt level even higher and more difficult to service.

While many economic numbers look promising, the % of the US population working is below its peak (65% in 2000) and also below it's pre-pandemic high (61% in 01/20). Right now it’s around 57.5%, or around 10 million people still not working. For the US to be “back on track” we need many more jobs, and raising interest rates would nip that in the bud.
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Old 07-25-2021, 08:25 AM   #49
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That would probably be counterproductive, lead to economic slowdown or even recession, and ironically make the real debt level even higher and more difficult to service.

While many economic numbers look promising, the % of the US population working is below its peak (65% in 2000) and also below it's pre-pandemic high (61% in 01/20). Right now it’s around 57.5%, or around 10 million peoples till not working. For the US to be “back on track” we need many more jobs, and raising interest rates would nip that in the bud.
Fair enough, but over time as folks tend to wish to be a little more conservative in investments as they go deeper into retirement, doesn't this then encourage keeping higher levels in stocks just to keep up with inflation?
Obviously, I am not speaking about those with high levels of investments and low levels of spending.
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Old 07-25-2021, 10:18 PM   #50
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Any news on how that would push forward the SS insolvency date & by how much they would have to reduce SS, and what year? Want to plug that into the Open Social Security calculator.
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Old 07-25-2021, 10:30 PM   #51
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We tried to plan for the possibility of high inflation - refinanced the fixed rate mortgage as rates dropped twice, bought TIPS, have tried to continually lower our fixed expenses each year, and the non-COLA pensions are offset somewhat by the fixed rate mortgage. The pensions won't go up but mortgage won't either. Our house should increase in value. We also don't have a lot of long term bonds. On paper at least, per my modeling, we end up with a higher net worth with high inflation than we would without it.
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Old 08-11-2021, 07:23 AM   #52
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The CPI-W index, for July, was posted this am. It increased 6%. (from 252.636 to 267.789). The August index will be announced Sep 14 and the Sep index will be announced Oct 13. The average of those three numbers will be the 2022 SS COLA.
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Old 08-11-2021, 07:43 AM   #53
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And a visual look at it (the dotted line shows last year):
Attached Images
File Type: jpg Screen Shot 2021-08-11 at 9.41.48 AM.jpg (110.5 KB, 96 views)
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Old 08-11-2021, 07:49 AM   #54
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Originally Posted by audreyh1 View Post
I don’t think Medicare premium increases are based on inflation statistics like SS but rather on the actual cost of the program.
I agree- but given the skyrocketing health costs in the US, it's pretty easy for premium increases to exceed the COLA adjustment.
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Old 08-11-2021, 08:39 AM   #55
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I agree- but given the skyrocketing health costs in the US, it's pretty easy for premium increases to exceed the COLA adjustment.
Yes, that has happened before. Particularly when the COLA is 0 or very low. Thus the “hold harmless” provision for those not subject to IRMAA.

Anyway, unlike SS, you can’t estimate the Medicare Part B premium increase ahead of time because it’s not based on a published number like CPI.
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Old 08-11-2021, 08:40 AM   #56
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Originally Posted by hogwild View Post
The CPI-W index, for July, was posted this am. It increased 6%. (from 252.636 to 267.789). The August index will be announced Sep 14 and the Sep index will be announced Oct 13. The average of those three numbers will be the 2022 SS COLA.
Were you rounding up?
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Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment.
https://www.bls.gov/news.release/pdf/cpi.pdf
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Old 08-11-2021, 12:35 PM   #57
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Here's another article which follows and calculates the trend toward the 2022 COLA. At this point it is at 5.7%, with two more data points to follow.

https://www.myfederalretirement.com/...rs-cola-watch/
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Old 08-11-2021, 12:43 PM   #58
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Originally Posted by audreyh1 View Post
From the report you cited:

Quote:
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 6.0 percent over the last 12 months to an index level of 267.789 (1982-84=100). For the month, the index rose 0.5 percent prior to seasonal
adjustment.
The 5.4 you reference was from the CPI-U

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The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in July on a seasonally adjusted basis after rising 0.9 percent in June, the U.S.Bureau of Labor Statistics reported today. Over the last 12 months, the all items
index increased 5.4 percent before seasonal adjustment.
SS COLA comes from the CPI-W index.
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Old 08-11-2021, 01:34 PM   #59
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I see. Thanks much. I thought they used the CPI-U

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Old 08-14-2021, 08:01 AM   #60
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What ever it is people need it with all the price hikes I am seeing.
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