Social Security Cost-of-Living Adjustment for 2020 Is 1.6%

[Midpack]

Knowing “the Social Security program is running out of money with benefits on track to be reduced by around 2035 unless Congress steps in,” I find it hard to understand why some would complain about how much or little any annual Soc Sec COL increase might be. And yes, I paid in all my working years just like most everyone else here.

I also agree the outlook for Medicare is a bigger concern. There are lots of “causes” but much higher underlying costs are at the root of it, and ultimately campaign finance. Something will have to give, presumably before Soc Sec gets into trouble.

Within 16 years from now, we’ll look back and realize benefits were relatively good in 2019...

[Gearhead Jim]

Quote:

Originally Posted by Chuckanut The Feds need to look at why medical care is so much more expensive than other 1st world countries. That is the big problem. Not insurance. Alas, our elected reps seem to have no interest in doing so. I wonder why? :sarcasm:

Our older daughter moved to England about 18 months ago for her job. The stories she tells us about the British healthcare system were both hilarious and pathetic. A colleague's wife works a medium-high position in pharmacy with NHS. This woman gives only one bit of advice: "Don't get sick in this country."

Our system could be a lot cheaper, but the British system seems like a poor template to follow.

[Midpack]

Quote:

Originally Posted by Gearhead Jim Our older daughter moved to England about 18 months ago for her job. The stories she tells us about the British healthcare system were both hilarious and pathetic. A colleague's wife works a medium-high position in pharmacy with NHS. This woman gives only one bit of advice: "Don't get sick in this country." Our system could be a lot cheaper, but the British system seems like a poor template to follow.

Might be, but what one woman told your daughter is anecdotal at best. The U.K. system and many others beat the US system in all established metrics, at about half the cost on average. Healthcare is way more expensive in the US with higher infant mortality and lower longevity. Only Americans in very good health or those covered by generous corporate benefits think the US “system” is worth defending.

[timo2]

Quote:

Originally Posted by Midpack Might be, but what one woman told your daughter is anecdotal at best. The U.K. system and many others beat the US system in all established metrics, at about half the cost on average. Healthcare is way more expensive in the US with higher infant mortality and lower longevity. Only Americans in very good health or those covered by generous corporate benefits think the US “system” is worth defending.

The health of the 'herd' is much better in other countries with universal health care. There will always be poor fits to the system, and these exceptions suffer so the overall population has better minimum health. The USA system seems to be good for the exceptions, but poor for the 'herd'. and everyone can not be 'exceptional'. When everyone is 'exceptional', no one is exceptional. IMO.

[Budatx]

Question regarding WEP's impact on Social Security and my Years of Substantial Earnings.

I currently have 28 years of substantial earnings; 30 years wipes away WEP impact. I can reach 29 years, by working until the end of May 2020, and 30 years by working until May 2021. I'll be 64 in two months, and my SS FRA is 66 and 2 months. I have a pension and fully paid retiree health insurance, and work only to complete the 30 years of substantial earnings. I also contribute the max to a 401k at current job. I plan to draw SS at FRA. My question: solely from a WEP impact perspective, and not considering the increase in SS payments from continuing to work, is it worth it for me to continue working only to reach 29, or 30, years of substantial earnings? Will either of those milestones make a significant difference in SS payments, as opposed to 28 years? Thanks!

[nate2953]

The first bend point is $0-960 for 2020. If you have 30 YOCs or no non-covered pension you get 90% of 960. If you have 29 YOCs you get 85% of 960. If you have 28 YOCs you get 80% and so on.

[timo2]

Quote:

Originally Posted by Budatx Question regarding WEP's impact on Social Security and my Years of Substantial Earnings. I currently have 28 years of substantial earnings; 30 years wipes away WEP impact. I can reach 29 years, by working until the end of May 2020, and 30 years by working until May 2021. I'll be 64 in two months, and my SS FRA is 66 and 2 months. I have a pension and fully paid retiree health insurance, and work only to complete the 30 years of substantial earnings. I also contribute the max to a 401k at current job. I plan to draw SS at FRA. My question: solely from a WEP impact perspective, and not considering the increase in SS payments from continuing to work, is it worth it for me to continue working only to reach 29, or 30, years of substantial earnings? Will either of those milestones make a significant difference in SS payments, as opposed to 28 years? Thanks!

DW is subject to WEP, so I've educated myself on it as much as I could. WEP and GPO are very corrosive to your SS benefits. If you can avoid them entirely, that it is worth it IMO. In my research, I found the website 'maximize my social security' had the best evaluation of WEP and GPO effects on my wifes situation. I paid the $40.00 for one year to use their program, and for me it was worth it.
https://maximizemysocialsecurity.com/

[67walkon]

I have a maybe silly question. I postponed SS until 70, although I did claim a spousal benefit. I just turned 70.

Is the 1.6% COLA based on the actual amount I get at age 70 or is it 1.6% of my fra amount? I've never been clear on that.

[Perryinva]

COLA increases are always applied to your PIA, (primary insurance amount) which is your amount at FRA, calculated when you file. However, since your age 70 amount is based on 48 months of delayed Retirement credits (DRCs) times the 0.6667% of your PIA, (or 32% of your PIA), it is the same thing as multiplying the COLA to your age 70 estimate. There is no compounding of the benefit by delaying. As a percent of total benefit, your last months increase is the smallest, ie every months increases is the same amount.

[pb4uski]

Quote:

Originally Posted by Perryinva COLA increases are always applied to your PIA, (primary insurance amount) which is your amount at FRA, calculated when you file. However, since your age 70 amount is based on 48 months of delayed Retirement credits (DRCs) times the 0.6667% of your PIA, (or 32% of your PIA), it is the same thing as multiplying the COLA to your age 70 estimate. There is no compounding of the benefit by delaying. As a percent of total benefit, your last months increase is the smallest, ie every months increases is the same amount.

Correct, the 8% increases are simple interest, not compounded... so the first year's increase is 8.00% but the last year's increase is only 6.45%.

100
108	8.00%
116	7.41%
124	6.90%
132	6.45%

I recognize that the increases are actually by month but I think people relate to them better by year.

[athena53]

Quote:

Originally Posted by gauss +1 In all seriousness, being beyond the second bend point, SS wise , played into my decision to RE. Not leaving much on the table by doing this.

That wasn't part of my decision but I calculated later that if I'd worked until 65 instead of retiring at 61, my SS would have gone up by a whole $50/month. In my last year my employers and I paid about $12K into SS. Throwing another $50K or so into SS over the next 4 years for another $50/month would not have been a very good return- not to mention the extra Medicare premiums, which would get me nothing at all.

[jimnjana]

Raise goes toward extra principal paid on monthly mortgage payment and increases in our monthly investment and savings accounts. Will get about a $1600 annual increase before taxes.

[MultiEventer]

Quote:

Originally Posted by Midpack Knowing “the Social Security program is running out of money with benefits on track to be reduced by around 2035 unless Congress steps in,” I find it hard to understand why some would complain about how much or little any annual Soc Sec COL increase might be. And yes, I paid in all my working years just like most everyone else here. I also agree the outlook for Medicare is a bigger concern. There are lots of “causes” but much higher underlying costs are at the root of it, and ultimately campaign finance. Something will have to give, presumably before Soc Sec gets into trouble. Within 16 years from now, we’ll look back and realize benefits were relatively good in 2019...

'


I started working on my FIRE plan in my late 30's after I went over the $100k mark in my 401k and started getting excited. This was just before I found FIRE web sites so my info came from investment newsletters and from my dad, whom was an expert in personal financial planning. As early as then, I totally disregarded SS as part of my plan since I originally was hoping for FIRE at 48. Well, I did FIRE but not until age 54. Could have at 52 but was cautious and waited until my 3rd child was out of college. I'm about 58 now and still don't even think much about SS. If it's there, it will be there and I'll take it. The question is whether I take the estimated 33k (both wife and I combined) at age 62 or wait until I'm 70 when the combined estimate will be just over 60k per year. At 1st, I thought I'll take it at 62 because you cannot predict the future and money earlier when young is better than later when older and less healthy. But now I'm reconsidering. My wife is 3 years older than me and was a SAHM for most of our marriage. But she can draw about 10k per year when she turns 62 from what she did earn, just before I turn 59. So why not do that for the next 11 years until I'm 70? At 70, I'll get a little over 40k and she can recharacterize and collect 50% off mine, making it a combined 60-62k estimated per year? Political shifts may change things. Being a FIRE'd couple with plenty of IRA investments to live off will be a tempting target for greedy politicians to attack the savers via means testing, regardless if I start at 62 or wait until 70.

[Perryinva]

Yes, since adjustments are yearly, annual is the same as monthly. Working longer for SS was never even a consideration. It is what it is, not like I had a choice. I had 35 maximum years at age 58, but was not where I wanted to be quite yet. Luck & 3 more years is all it took. The last 4 years income will have made little impact to SS, maybe $150/m, with the last year nothing at all. Most of the gains would be COLA. Between employer and FICA/MED taxes, over $20k/yr last few years for essentially no increase. My contribution to a sounder SS!

And I hope multieventer realizes realizes if his wife files for her own at 62, then she will never get 1/2 of his at even FRA, much less at 70. . It will actually be less than 1/2 the difference of his FRA PIA when he files, and her FRA PIA when she filed.

[Sunset]

Quote:

Originally Posted by Budatx Question regarding WEP's impact on Social Security and my Years of Substantial Earnings. I currently have 28 years of substantial earnings; 30 years wipes away WEP impact. I can reach 29 years, by working until the end of May 2020, and 30 years by working until May 2021. I'll be 64 in two months, and my SS FRA is 66 and 2 months. I have a pension and fully paid retiree health insurance, and work only to complete the 30 years of substantial earnings. I also contribute the max to a 401k at current job. I plan to draw SS at FRA. My question: solely from a WEP impact perspective, and not considering the increase in SS payments from continuing to work, is it worth it for me to continue working only to reach 29, or 30, years of substantial earnings? Will either of those milestones make a significant difference in SS payments, as opposed to 28 years? Thanks!

Like Nate2953 said, it will make a difference. In a really rough approximation close to a 8% lower SS amount in total.

Certainly if you could work the minimum required to get the SS year of substantial earnings (approx $5K , but look it up) It's super worth it.

Note: SS works on a yearly basis, so if you work a few months in 2020 at a good rate of income, that year is taken care of for the SS substantial earnings. So covering that 28th year should be easy.

[Gearhead Jim]

Quote:

Originally Posted by Midpack Might be, but what one woman told your daughter is anecdotal at best. The U.K. system and many others beat the US system in all established metrics, at about half the cost on average. Healthcare is way more expensive in the US with higher infant mortality and lower longevity. Only Americans in very good health or those covered by generous corporate benefits think the US “system” is worth defending.

I think the metrics don't tell the whole story, for two reasons:
1. The US has a large "underclass" of people with low education (including health education) and horribly unhealthy lifestyles; worse than most European countries Getting these people to take better care of themselves wouldn't require specific medical treatment, but it's not happening.
2. The metrics in other countries don't seem to count the number of "walking wounded", those with conditions that aren't deadly or even disabling, but can make your life miserable. Our daughter would fall into that group, having a couple of medical (not emotional) problems that the British system either ignores or stalls treatment on. It's bad enough that she periodically flys back to the US for treatments and medicine.

If you are impoverished and uninsured, then the British system may be better for you. If you have reasonable-but-not luxurious insurance like our daughter had here, the US does well. Our daughter works in HR and Benefits, she knows the cost of health insurance in the US both to individuals and corporations. Neither she nor any of her colleagues would pick the British system if they had a choice.

How the government run systems in countries other than Britain work, I don't know.

[jimandthom]

Midpack----- I'll take 1.6 percent with no complaints too!

Just got the future purchase option costs and premium for my LTC. so all our expected medical premium costs are in for the year provided I don't change anything.

Our combined cola % is modest, right about $1000. Various medical insurance increases including an inflation addon for LTC , all combined went up about 600 for the year.

The largest increase was our FEHB supplement about a 10% increase, but they provide an 1800 per year reimbursement account so not gonna complain about that.

[PartIrish]

Quote:

Originally Posted by Gearhead Jim Our older daughter moved to England about 18 months ago for her job. The stories she tells us about the British healthcare system were both hilarious and pathetic. A colleague's wife works a medium-high position in pharmacy with NHS. This woman gives only one bit of advice: "Don't get sick in this country." Our system could be a lot cheaper, but the British system seems like a poor template to follow.

My sister has lived in both the UK and the US over the past 20 years. She has many experiences with the NHS, and as a former RN, in a good position to evaluate healthcare quality. On the whole, she has had high praise for the NHS. It is not perfect, but no British citizens have been bankrupted by medical costs. Every year, the U.S. healthcare system is responsible for the bankruptcy of an estimated 500,000 people.

I can relay my own brief experience: a few years ago we spent Christmas in London and two of us contracted the really awful respiratory virus that was prevalent that year (it kept the queen from delivering her annual Christmas address). Both my son and I ended up going to clinics with respiratory symptoms that wouldn't resolve. As a walk-in patient I was seen in less than 20 minutes, received a full exam by a bright young GP, and was given an Rx for an inhaler as well as some recommendations for the cough. Cost? £8 for the inhaler, which they handed to me right at the clinic. My son received antibiotics and cough medicine. Same cost. I was highly impressed with the efficiency and convenience.

My apologies that this post is off-topic to the original thread--but the comments above about the NHS are not well-informed and deserve a broader point of view.

[Midpack]

Quote:

Originally Posted by Gearhead Jim I think the metrics don't tell the whole story, for two reasons: 1. The US has a large "underclass" of people with low education (including health education) and horribly unhealthy lifestyles; worse than most European countries Getting these people to take better care of themselves wouldn't require specific medical treatment, but it's not happening. 2. The metrics in other countries don't seem to count the number of "walking wounded", those with conditions that aren't deadly or even disabling, but can make your life miserable. Our daughter would fall into that group, having a couple of medical (not emotional) problems that the British system either ignores or stalls treatment on. It's bad enough that she periodically flys back to the US for treatments and medicine. If you are impoverished and uninsured, then the British system may be better for you. If you have reasonable-but-not luxurious insurance like our daughter had here, the US does well. Our daughter works in HR and Benefits, she knows the cost of health insurance in the US both to individuals and corporations. Neither she nor any of her colleagues would pick the British system if they had a choice. How the government run systems in countries other than Britain work, I don't know.

Let’s say your caveats are legit. Q: Is US healthcare worth twice as much as all other OECD on average and far more than any other country in the world? A: Not even close, and we don’t even cover every citizen like almost every other developed country.

We’re all paying for the exorbitant health care we get (unless you’re not covered). Too many Americans think their premium are the total cost, not even close.

I can’t see any way to hold up US healthcare as preferable. As someone above mentioned the US may be the leader in cutting edge medicine, but it doesn’t provide a decent value or serve the vast majority of Americans very well.