I am 61 years old: Will my Social Security benefits reflect the 8.7% increase?

[Digital Nomad]

I can't get a straight answer to this question after hours of research. Please help!

I am getting the impression that the worst age to be for upcoming Social Security Checks is age 61. I am expecting to collect Social Security next year when I turn 62 years old. But read that people who are currently age 61 are in a donut hole for increases in future benefits increases.

The "impression" I get from my research says: I won't be eligible for the upcoming 8.7% Social Security inflation increase for 2023.

And I am not impacted by the large increase in the average annual wage that impacts how my historical pay is normed going back 35 years. That stops at age 60.

So if I understand correctly, my SS Amount at age 62 and going forward is not benefited from the 2022- or 2023 inflation increases, or the Average Annual wage figure because I am 61 years old.

 

[FI_RElater]

As posted on the long SS thread:

https://www.helpwithmysocialsecurity.com/post/social-security-colas-for-ages-60-62

the bad news: the result is that you don't get the increase, and will forever lag that percentage

the good news: there's nothing you could, or could have, done about it (you might get lucky if congress decides to somehow do something about it....there's a small precedent for that from before....but I wouldn't be holding my breath for that)

 

[DrRoy]

I am not familiar with the specifics of the donut hole, but I can say that any benefit after the next COLA will not show up until it goes into effect next year.

 

[chicamuxen]

If i was born mid December 1960, would i get next years COLA? Not sure how they do that.

 

[4legsgood]

I can't get a straight answer to this question after hours of research. Please help!

I am getting the impression that the worst age to be for upcoming Social Security Checks is age 61. I am expecting to collect Social Security next year when I turn 62 years old. But read that people who are currently age 61 are in a donut hole for increases in future benefits increases.

The "impression" I get from my research says: I won't be eligible for the upcoming 8.7% Social Security inflation increase for 2023.

And I am not impacted by the large increase in the average annual wage that impacts how my historical pay is normed going back 35 years. That stops at age 60.

So if I understand correctly, my SS Amount at age 62 and going forward is not benefited from the 2022- or 2023 inflation increases, or the Average Annual wage figure because I am 61 years old.

You won't get the 8.7% COLA. You will get all future COLA's. The juicy AWI of 8.89% is yours! It's applied to your income before age 60. Income past age 59 is not indexed. Things worked out fine for 1960 and 1961 cohorts. That's my interpretation.

 

[4legsgood]

If i was born mid December 1960, would i get next years COLA? Not sure how they do that.

An easy way to remember is, you will get the COLA that is announced in the year that you are 62.

 

[teejayevans]

If i was born mid December 1960, would i get next years COLA? Not sure how they do that.

Yes, but you didn’t get the 5.9% from last year.

 

[4legsgood]

Yes, but you didn’t get the 5.9% from last year.

And you do get the pretty good AWI increase of 2.83% applied to years earnings prior to age 60, and early predictions of that were that it was going to be negative due to covid.

 

[MikeWillRetire]

There is a discussion over on Bogleheads that concludes that this loss of Cola may not be true. I'm no expert, so here is the thread:

https://www.bogleheads.org/forum/viewtopic.php?t=388003&start=100

 

[Dtail]

And you do get the pretty good AWI increase of 2.83% applied to years earnings prior to age 60, and early predictions of that were that it was going to be negative due to covid.

This is true and that article reference while technically correct, is just plain misleading.
Each year through age 61, one gets the AWI increase and the then the COLA increase from 62 onward.

 

[niven]

This is true and that article reference while technically correct, is just plain misleading.
Each year through age 61, one gets the AWI increase and the then the COLA increase from 62 onward.

Yes, although the indexing factors lag behind. I don't think the following link has been posted in any of the recent threads.

https://www.ssa.gov/oact/cola/awifactors.html

Put in your year of first eligibility (2023 for OP's age 62) and it gives you the table of indexing factors applied to your earnings (up to the SS limit). The last two factors will be 1. So for OP, the last wage adjustment factor they get will be the 1.0889195 factor for the average wage difference between 2021 and 2020.

Note if you put in a year yet to be determined (2024 or higher), estimates will be used from the trustee's report for the additional years.

Also note the latest 1.0889195 factor for 2020 was used to increase the PIA bend points from $1024 and $6172 to $1115 and $6721 for 2023.

 

[FloridaWizard]

Yes, although the indexing factors lag behind. I don't think the following link has been posted in any of the recent threads.

https://www.ssa.gov/oact/cola/awifactors.html

Put in your year of first eligibility (2023 for OP's age 62) and it gives you the table of indexing factors applied to your earnings (up to the SS limit). The last two factors will be 1. So for OP, the last wage adjustment factor they get will be the 1.0889195 factor for the average wage difference between 2021 and 2020.

Note if you put in a year yet to be determined (2024 or higher), estimates will be used from the trustee's report for the additional years.

Also note the latest 1.0889195 factor for 2020 was used to increase the PIA bend points from $1024 and $6172 to $1115 and $6721 for 2023.

Born in 1960. I go to the linked website, put in 2022 as year of eligibility. It shows indexing factors for 2020 and 2021 as 1.0 and 1.0. Seems like I get no benefit from AWI nor COLA in those 2 years. What am I missing?

 

[4legsgood]

Born in 1960. I go to the linked website, put in 2022 as year of eligibility. It shows indexing factors for 2020 and 2021 as 1.0 and 1.0. Seems like I get no benefit from AWI nor COLA in those 2 years. What am I missing?

The indexing applies to all your years previous to turning 60. That high school job, mine was selling shoes, gets indexed, probably multiplied by 5. And so on with decreasing multiplier as you get more recent.

As explained in another thread:
Go to website below first for 'how to' instructions, you will then have to login to your soc security account and cut and paste your info. Voila, you will see your monthly social security benefit updated for latest AWI and COLA.

https://ssa.tools/

 

[Kabowest]

This Social Security Calculator has been updated with the new AWI numbers for next year.

If you copy and paste your earnings from the my Social Security site it will display your new benefit amounts.

https://ssa.tools/

 

[niven]

Born in 1960. I go to the linked website, put in 2022 as year of eligibility. It shows indexing factors for 2020 and 2021 as 1.0 and 1.0. Seems like I get no benefit from AWI nor COLA in those 2 years. What am I missing?

The AWI factors for 2018 and 2019 were determined and applied to you in 2020 and 2021. So you got your last two adjustments to AWI, but for previous years.

 

[almost there]

I just plugged mine in the ssa.tools site above, and it does show the 8.7% increase $2361. Over todays number on the actual ssa.gov. site $2173. So, am a but confused? Will be 62 next Sep.
Just to confuse things. What am I missing?

 

[niven]

I just plugged mine in the ssa.tools site above, and it does show the 8.7% increase $2361. Over todays number on the actual ssa.gov. site $2173. So, am a but confused? Will be 62 next Sep.
Just to confuse things. What am I missing?

Since you're turning 62 in 2023, you should get the AWI increase for 2020 of 1.0889195, which would be about the same as the COLA. I would have thought it would be a few dollars more based on your numbers.

 

[Global Wizzo]

Similar situation.

I was trying to sort through this a few years ago. Mine was to wait until Apr and take at 70 or start in Dec and get the COLA. In my case, I had the option to start in Dec, catch the increase which after running the numbers was a better option that delaying.

In your case, like others said, you won’t see the bump. You have to be taking the benefit before the end of the year to get the COLA increase.

 

[cnocmmz]

Short answer is if you were not turning 62 this year then I do not think you are getting it

 

[finnski1]

I was trying to sort through this a few years ago. Mine was to wait until Apr and take at 70 or start in Dec and get the COLA. In my case, I had the option to start in Dec, catch the increase which after running the numbers was a better option that delaying.

In your case, like others said, you won’t see the bump. You have to be taking the benefit before the end of the year to get the COLA increase.

I don't follow this. you were 69 in December and about to turn 70 the following April. You were going to get the COLA either way.

 

[Free]

I'm 67 and missed 2 months of FRA by less than a week because of the age tables changing. 66 and 2 months vs 66 and 4 months (me). Not a doughnut hole, but kind of felt like it. Baby born January 3 vs December 31, cost us a dependent deduction for a year once. Hope you get the COLA. Learned a long time ago with the draft lottery that life isn't always fair.

 

[almost there]

Since you're turning 62 in 2023, you should get the AWI increase for 2020 of 1.0889195, which would be about the same as the COLA. I would have thought it would be a few dollars more based on your numbers.

8.7% is $189/month in my case. And is reflected above. 2173+189=2362
No idea where the 1.08 of 2020 comes into play here?

 

[David3]

I can't get a straight answer to this question after hours of research. Please help!

I am getting the impression that the worst age to be for upcoming Social Security Checks is age 61. I am expecting to collect Social Security next year when I turn 62 years old. But read that people who are currently age 61 are in a donut hole for increases in future benefits increases.

The "impression" I get from my research says: I won't be eligible for the upcoming 8.7% Social Security inflation increase for 2023.

And I am not impacted by the large increase in the average annual wage that impacts how my historical pay is normed going back 35 years. That stops at age 60.

So if I understand correctly, my SS Amount at age 62 and going forward is not benefited from the 2022- or 2023 inflation increases, or the Average Annual wage figure because I am 61 years old.

The determining factor is your birth year. If you were born in 1960, your 'base' benefit was set last fall using the 2020 AWI and your benefits will be adjusted up 8.7% by the COLA.
If you were born in 1961, your base benefit will be set shortly using the 2021 AWI. The 2021 AWI increased 8.9% from 2020, so instead of an 8.7% COLA, 1961 babies are getting an 8.9% bump compared to 1960 babies.

 

[niven]

8.7% is $189/month in my case. And is reflected above. 2173+189=2362
No idea where the 1.08 of 2020 comes into play here?

Since you were born in 1961, the ssa.tools calculator isn't showing any COLA adjustments. The PIA increase is based on the 2020 AWI increase of 1.0889195 (or about 8.9%) applied to 2020 and earlier SS earnings. The numbers seem to be the same in your specific case, but mine is about 8.8% more. It depends on your earnings over the years.

If you put in the same info and made your birth year 1960, it should give you the lower amount for your PIA and state that your PIA will be increased by 8.7% at the end of 2022 (the COLA).

 

[almost there]

Thanks, should have known. As the Gov. is involved. Making simple things difficult.

"The wage index is a lagging indicator. Whereas the COLA is based on the prior year’s CPI (third quarter to third quarter), the indexing factors and bend points are based on the AWI two years prior. This can cause a bit of a disconnect. Usually the AWI exceeds the CPI, but in 2020—the index used in calculating PIAs for 62-year-olds in 2022—it didn’t. The 2020 AWI rose just 2.83% over the 2019 index, compared to the 5.9% COLA.

This can cause some inequities among cohorts. This year’s 62-year-olds (the 1960 cohort) didn’t get the COLA because their PIAs were only just calculated this year—and their indexing factors and bend points were based on a lower-than-usual increase in the AWI. Next year, the 1960 cohort will get the (presumably high) COLA along with everyone else over age 62, but the 1961 cohort, who will be having their PIA calculated in 2023, will not. Their increase will depend on the amount by which the 2021 AWI exceeds the 2020 AWI of 55,628.60. Wage statistics are not as easy to track as the CPI, so there’s really no telling what the 2021 AWI increase will be or what those indexing factors and bend points will turn out to be."