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Social Security COLA 2024
Old 08-10-2023, 10:29 AM   #1
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Social Security COLA 2024

Based on the CPI for 7/2023, the calculation used, and the trend for previous third quarters of recent years as well as recent months this year, it looks like the cost of living increase for 2024 could be between 2.5% to 2.9%, probably closer to 2.7%.

I personally do not agree with 3% estimates seen online.

My opinion only, based on the formula and what I have seen in the past.

Anyone see it differently?
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Old 08-10-2023, 10:37 AM   #2
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Quote:
Originally Posted by zl55lz View Post
Based on the CPI for 7/2023, the calculation used, and the trend for previous third quarters of recent years as well as recent months this year, it looks like the cost of living increase for 2024 could be between 2.5% to 2.9%, probably closer to 2.7%.

I personally do not agree with 3% estimates seen online.

My opinion only, based on the formula and what I have seen in the past.

Anyone see it differently?
Do you have national data that contradicts the 3%?
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Old 08-10-2023, 11:04 AM   #3
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According to The Finance Buff, Harry Sit, looks like it will be 2.7% min, 3.2% max.
https://thefinancebuff.com/social-se...projected.html
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Old 08-10-2023, 11:05 AM   #4
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Originally Posted by jebmke View Post
Do you have national data that contradicts the 3%?
It's an easy calculation. The formula is as follows

x = average CPI-W for 3Q22, which was 291.901
y = average CPI-W for 3Q23.

COLA % = ((y/x) -1) x 100

We don't know precisely what 3Q23 CPI-W will be, but the first month (July) is now in, and it is 299.899 . For the purposes of this exercise, let's assume CPI-W does not change in August or September, so the average will be the same as July or 299.899.

So:

COLA = ((299.899/291.901) - 1) x 100 = (1.0274 - 1) x 100 = 2.74%

Social Security rounds to the nearest 0.1%, so COLA starting with checks received in Jan 2024 will be 2.7%, assuming no inflation in August or September (which means it could be higher, although I will note that CPI-W actually decreased in August and September last year)

Here is the source of historical CPI-W data https://www.ssa.gov/oact/STATS/cpiw.html

Here is today's BLS release with CPI-W for July 2023 https://www.bls.gov/news.release/cpi.nr0.htm

Here is the Social Security rule

Quote:
A COLA effective for December of the current year is equal to the percentage increase (if any) in the CPI-W from the average for the third quarter of the current year to the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA for the year.
https://www.ssa.gov/oact/COLA/latestCOLA.html
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Old 08-10-2023, 11:09 AM   #5
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Quote:
Originally Posted by jebmke View Post
Do you have national data that contradicts the 3%?
The data is available at data.bls.gov, then use the formula. The cola is currently based on the third quarter cpi average of each year compared to the previous year third quarter.

https://data.bls.gov/cgi-bin/surveymost?cw

Check the top box and retrieve. Will bring up prior and current years by month for cpi.

The formula as I read it is :

Average of third quarter cpi from the current year minus third quarter average of previous year divided by third quarter average of previous year times 100 = % cola expected. If one looks at the trends one can see different possibilities. A guessing game but can be interesting to play around with.

If anyone knows differently please post.
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Old 08-10-2023, 11:19 AM   #6
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Unless something incredible (good or bad) happens to the U.S. economy btwn mid August and end of Sept.......the 2024 cola will be btwn 2.5% and 3.1%
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Old 08-10-2023, 11:32 AM   #7
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Quote:
Originally Posted by zl55lz View Post
The data is available at data.bls.gov, then use the formula. The cola is currently based on the third quarter cpi average of each year compared to the previous year third quarter.

https://data.bls.gov/cgi-bin/surveymost?cw

Check the top box and retrieve. Will bring up prior and current years by month for cpi.

The formula as I read it is :

Average of third quarter cpi from the current year minus third quarter average of previous year divided by third quarter average of previous year times 100 = % cola expected. If one looks at the trends one can see different possibilities. A guessing game but can be interesting to play around with.

If anyone knows differently please post.
ah, misinterpreted your post before. I thought you were challenging the inflation data. I agree, the 3% number kicked around recently seems a bit high. On the other hand, I ignore all data to the right of any decimal point when anyone puts out "forecasts" or "estimates".

Eventually we will get an actual number and that will be it.
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Old 09-13-2023, 08:22 AM   #8
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Please correct me if you disagree but, with todays Aug release it appears the Aug CPI number is 307.026 so if my math is correct the 2 month average is 303.4625 or 3.96% with Sept. to be announced on Oct. 12.

COLA =307.026+299.899= 606.925/2 = 303.4625
((303.4625/291.901) - 1) x 100 = (1.039608 - 1) x 100 = 3.96%

If Oct. remains the same at 307.4625 the 3 month average would be 304.6503 and COLA = ((304.6503/291.901) - 1) x 100 = (1.043677 - 1) x 100 = 4.36%

It appears the 307.026 number is not the number that is used for COLA - Sorry! The CPI-W is only 301.551 which would make the 2 month average 3.022% and if the CPI-W stays the same the 3 month average would be 3.12%
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Old 09-13-2023, 08:36 AM   #9
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SS uses CPI-W; IRMAA uses CPI-U; and I believe indexing of tax brackets is based on CPI-C (chained).
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Old 09-13-2023, 08:45 AM   #10
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Originally Posted by wmc1000 View Post
Please correct me if you disagree but, with todays Aug release it appears the Aug CPI number is 307.026 so if my math is correct the 2 month average is 303.4625 or 3.96% with Sept. to be announced on Oct. 12.

COLA =307.026+299.899= 606.925/2 = 303.4625
((303.4625/291.901) - 1) x 100 = (1.039608 - 1) x 100 = 3.96%

If Oct. remains the same at 307.4625 the 3 month average would be 304.6503 and COLA = ((304.6503/291.901) - 1) x 100 = (1.043677 - 1) x 100 = 4.36%

It appears the 307.026 number is not the number that is used for COLA - Sorry! The CPI-W is only 301.551 which would make the 2 month average 3.022% and if the CPI-W stays the same the 3 month average would be 3.12%

That CPI-W twist has led many people astray, including me. Social Security rounds to the nearest tenth of a percent so it looks like the next COLA will be 3.1%, maybe a little more. Last year, CPI-W dropped in September.
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Old 09-13-2023, 08:45 AM   #11
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I guess anything can happen in the next month, but this is how the CPI-W is going as of now:
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Old 09-13-2023, 08:47 AM   #12
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Saw this "bulletin" a few minutes ago on Marketwatch:

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Senior group estimates Social Security annual cost-of-living adjustment at 3.2%
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Old 09-13-2023, 09:27 AM   #13
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I am surprised at the 1.652 increase in cpi used for cola since last month. There has not been a greater than approx 0.70 DECREASE month over month in the last 10 years in the 3rd quarter from what I saw, so if this holds true for next month or with an increase over this month, it does look like my initial opinion of a 2.7% cola was low. I would agree with others now it could be approx 3%. I did not expect that based on past modeling data.


I do suspect there will now soon be another interest rate hike announced, possibly two before the end of the year?
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Old 09-13-2023, 02:52 PM   #14
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I think the calculation is the percentage increase between the average CPI-W for July, August and September of 2023(only one missing datapoint to go in that number) and the average CPI-W number for July, August and September of 2022, which is 291.901. The average of July and August for 2023 is 300.725(with the one missing data point). If the CPI-W were exactly the same for September 2023, the 2024 Cola would be 3.12%. Knowing that September will likely not be identical to August, the final Cola could be a bit more than 3.12%, or I suppose a bit less.
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Old 10-02-2023, 07:12 AM   #15
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Two questions:

1. When do we expect the CPI-W data for September?

2. When will we know the indexing factors for 2021?
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Old 10-02-2023, 07:29 AM   #16
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Originally Posted by G-Man View Post
Two questions:

1. When do we expect the CPI-W data for September?

2. When will we know the indexing factors for 2021?
1. 10/12/2023 8:30am ET
2. Don't know
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Old 10-02-2023, 07:29 AM   #17
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Two questions:

1. When do we expect the CPI-W data for September?

2. When will we know the indexing factors for 2021?
October 13.

I don't understand what you mean by #2.
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Old 10-02-2023, 07:36 AM   #18
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October 13.

I don't understand what you mean by #2.
Indexing factors for Social Security.

https://www.ssa.gov/oact/cola/awifactors.html
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Old 10-02-2023, 07:39 AM   #19
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2. All I could quickly find was the national average wage index is "published in the Federal Register in late October".
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Old 10-02-2023, 08:24 AM   #20
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Indexing factors for Social Security.

https://www.ssa.gov/oact/cola/awifactors.html
That has nothing to do with COLA, so you seem to be conflating two different things.
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