4.7% SS COLA?
4.7% SS COLA?
According to this link there might be a 4.7% adjustment to Social Security benefits next year. Sounds like a good news/bad news issue reflecting actual costs that will be experienced.
Bob
Re: 4.7% SS COLA?
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased by 0.89 percent in April 2021. That means the 2022 Cost of Living Adjustment (COLA) for Social Security and Federal pensions currently stands at 3.08%. The final COLA will be based on any monthly additions or subtractions through the month of September. As was stated in the referenced article, the COLA for 2021 was 1.3%
The numbers can indeed be a good news/bad news kind of thing. As an example, back in 1981 the Social Security increase was 11.2%. Sounds great until that number is compared to what was happening to overall prices for goods and services. My supervisor had a mortgage that was over 17%, and my pay raise (Federal Government) that year was 4.4%. I wouldn’t call that situation “good news”.
The numbers can indeed be a good news/bad news kind of thing. As an example, back in 1981 the Social Security increase was 11.2%. Sounds great until that number is compared to what was happening to overall prices for goods and services. My supervisor had a mortgage that was over 17%, and my pay raise (Federal Government) that year was 4.4%. I wouldn’t call that situation “good news”.
Re: 4.7% SS COLA?
That is one organization’s best guess.
They have no data for May, June, July, August and September so they cannot know next year’s COLA - Social Security COLA is based on October through September numbers.
They have no data for May, June, July, August and September so they cannot know next year’s COLA - Social Security COLA is based on October through September numbers.
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Re: 4.7% SS COLA?
SS COLA is based on the average change in CPI-W over the three months of the third quarter (July, August, September) compared to the same quarter the previous time there was an increase.
Since this is backward looking, you benefit from the higher prices you are already experiencing.
Since this is backward looking, you benefit from the higher prices you are already experiencing.
Re: 4.7% SS COLA?
Highly doubt it. 4.7% COLA rate doesn't meet the eye test. The rate is too high. If I were to place any bet on SS COLA, it'll be that COLA will be less than 4%.
"Know what you own, and know why you own it." — Peter Lynch
Re: 4.7% SS COLA?
I also would take the Under on 4.7% or even 4%
Guess the question is whether the March and April CPI-W numbers are a trend or an aberration? My guess it's just noise and that the new COLA will be less than 3%.
Re: 4.7% SS COLA?
The fact that SS has a COLA is known. Exactly what the rate will be next year is pure speculation.
IMPORTANT NOTE: I am not currently claiming Social Security, so someone who is should confirm whether or not my comments below are actually accurate.
There are two things to note about the COLA.
1) If the COLA works as advertised, then your buying power should stay substantially the same. A large or a small COLA should not make any effective difference in your standard of living, because it's supposed to track with your actual expenses.
2) The COLA is set to the wrong benchmark. It does not track expenses for retired senior citizens accurately, and therefore helps less and less each year.
From this, I concluded that Social Security is best kept as longevity insurnce, a stream of income to be invoked as late as possible, to make it as large as possible. It shouldn't be used as your sole income stream if you can help it. It is best used to prevent you from depleting your investments.
IMPORTANT NOTE: I am not currently claiming Social Security, so someone who is should confirm whether or not my comments below are actually accurate.
There are two things to note about the COLA.
1) If the COLA works as advertised, then your buying power should stay substantially the same. A large or a small COLA should not make any effective difference in your standard of living, because it's supposed to track with your actual expenses.
2) The COLA is set to the wrong benchmark. It does not track expenses for retired senior citizens accurately, and therefore helps less and less each year.
From this, I concluded that Social Security is best kept as longevity insurnce, a stream of income to be invoked as late as possible, to make it as large as possible. It shouldn't be used as your sole income stream if you can help it. It is best used to prevent you from depleting your investments.
Re: 4.7% SS COLA?
thanks.trueblueky wrote: ↑Sat May 15, 2021 5:51 pm SS COLA is based on the average change in CPI-W over the three months of the third quarter (July, August, September) compared to the same quarter the previous time there was an increase.
Since this is backward looking, you benefit from the higher prices you are already experiencing.
does anyone have a link to the actual analysis done by the senior citizen's league?
i think weird things can probably happen here because inflation has been so volative with deflation happening as well. and the social security adjustments are floored at zero. so just to give a hypothetical, if there was 10% deflation one year and 11% inflation the next year so that prices were flat over that 2 year period, the cola adjustments would be 0% and 11% which is obviously good news for Social security recipients.
cheers,
grok
RIP Mr. Bogle.
Re: 4.7% SS COLA?
I looked, but couldn't find any analysis. It may simply be an extrapolation of the 4.7% April 2020 to April 2021 increase. If so, they're implicitly assuming the same 1.56% increase April to Jul-Aug-Sep average as occurred in 2020. Here are the last ten years of the CPI-W for reference (from "U.S. city average, All items - CWUR0000SA0" at BLS CPI-W Top Picks).
Code: Select all
- Change vs Prior Year -
Apr Jul Aug Sep SS Avg SS-Apr Apr-SS SS-SS
2011 221.743 222.686 223.326 223.688 223.233
2012 227.012 225.568 227.056 228.184 226.936 1.69% (0.03%) 1.66%
2013 228.949 230.084 230.359 230.537 230.327 0.89% 0.60% 1.49%
2014 233.443 234.525 234.030 234.170 234.242 1.35% 0.34% 1.70%
2015 231.520 233.806 233.366 232.661 233.278 (1.16%) 0.76% (0.41%)
2016 233.438 234.771 234.904 235.495 235.057 0.07% 0.69% 0.76%
2017 238.432 238.617 239.448 240.939 239.668 1.44% 0.52% 1.96%
2018 244.607 246.155 246.336 246.565 246.352 2.06% 0.71% 2.79%
2019 249.332 250.236 250.112 250.251 250.200 1.21% 0.35% 1.56%
2020 249.515 252.636 253.597 254.004 253.412 (0.27%) 1.56% 1.28%
2021 261.237 265.322* 3.09% 1.56% 4.70%
That's not quite how it works. For example as shown above, the CPI-W fell 0.41% from 2014 to 2015 so there was no COLA for 2016. However, the COLA for 2017 was not based on the 0.76% increase 2015 to 2016. It was only 0.3% based on the increase from 2014 to 2016 (0.3% = 235.057 / 234.242 - 1). The bottom of this SSA webpage shows the COLAs since 1975.grok87 in same post wrote:... social security adjustments are floored at zero. so just to give a hypothetical, if there was 10% deflation one year and 11% inflation the next year so that prices were flat over that 2 year period, the cola adjustments would be 0% and 11% which is obviously good news for Social security recipients.
* Estimated 4.7% increase from prior year.
Last edited by #Cruncher on Sun May 16, 2021 7:14 am, edited 1 time in total.
Re: 4.7% SS COLA?
Ah i see. Thanks for the correction.#Cruncher wrote: ↑Sun May 16, 2021 6:57 amI looked, but couldn't find any analysis. It may simply be an extrapolation of the 4.7% April 2020 to April 2021 increase. If so, they're implicitly assuming the same 1.56% increase April to Jul-Aug-Sep average as occurred in 2020. Here are the last ten years of the CPI-W for reference (from "U.S. city average, All items - CWUR0000SA0U.S. city average, All items - CWUR0000SA0" at BLS CPI-W Top Picks).Code: Select all
Apr Jul Aug Sep SS Avg SS-Apr Apr-SS SS-SS 2011 221.743 222.686 223.326 223.688 223.233 2012 227.012 225.568 227.056 228.184 226.936 1.69% (0.03%) 1.66% 2013 228.949 230.084 230.359 230.537 230.327 0.89% 0.60% 1.49% 2014 233.443 234.525 234.030 234.170 234.242 1.35% 0.34% 1.70% 2015 231.520 233.806 233.366 232.661 233.278 (1.16%) 0.76% (0.41%) 2016 233.438 234.771 234.904 235.495 235.057 0.07% 0.69% 0.76% 2017 238.432 238.617 239.448 240.939 239.668 1.44% 0.52% 1.96% 2018 244.607 246.155 246.336 246.565 246.352 2.06% 0.71% 2.79% 2019 249.332 250.236 250.112 250.251 250.200 1.21% 0.35% 1.56% 2020 249.515 252.636 253.597 254.004 253.412 (0.27%) 1.56% 1.28% 2021 261.237 265.322* 3.09% 1.56% 4.70%
That's not quite how it works. For example as shown above, the CPI-W fell 0.41% from 2014 to 2015 so there was no COLA for 2016. However, the COLA for 2017 was not based on the 0.76% increase 2015 to 2016. It was only 0.3% based on the increase from 2014 to 2016 (0.3% = 235.057 / 234.242 - 1). The bottom of this SSA webpage shows the COLAs since 1975.grok87 in same post wrote:... social security adjustments are floored at zero. so just to give a hypothetical, if there was 10% deflation one year and 11% inflation the next year so that prices were flat over that 2 year period, the cola adjustments would be 0% and 11% which is obviously good news for Social security recipients.
* Estimated 4.7% increase from prior year.
How would it work for ibonds in this scenario?
RIP Mr. Bogle.
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Re: 4.7% SS COLA?
Bold added.grok87 wrote: ↑Sun May 16, 2021 5:50 amthanks.trueblueky wrote: ↑Sat May 15, 2021 5:51 pm SS COLA is based on the average change in CPI-W over the three months of the third quarter (July, August, September) compared to the same quarter the previous time there was an increase.
Since this is backward looking, you benefit from the higher prices you are already experiencing.
does anyone have a link to the actual analysis done by the senior citizen's league?
i think weird things can probably happen here because inflation has been so volative with deflation happening as well. and the social security adjustments are floored at zero. so just to give a hypothetical, if there was 10% deflation one year and 11% inflation the next year so that prices were flat over that 2 year period, the cola adjustments would be 0% and 11% which is obviously good news for Social security recipients.
cheers,
grok
The increase would be 0.
100(.9)(1.11) = 100 (almost)
The following year would still use 100 as its standard for comparison.
Re: 4.7% SS COLA?
thankstrueblueky wrote: ↑Sun May 16, 2021 11:30 amBold added.grok87 wrote: ↑Sun May 16, 2021 5:50 amthanks.trueblueky wrote: ↑Sat May 15, 2021 5:51 pm SS COLA is based on the average change in CPI-W over the three months of the third quarter (July, August, September) compared to the same quarter the previous time there was an increase.
Since this is backward looking, you benefit from the higher prices you are already experiencing.
does anyone have a link to the actual analysis done by the senior citizen's league?
i think weird things can probably happen here because inflation has been so volative with deflation happening as well. and the social security adjustments are floored at zero. so just to give a hypothetical, if there was 10% deflation one year and 11% inflation the next year so that prices were flat over that 2 year period, the cola adjustments would be 0% and 11% which is obviously good news for Social security recipients.
cheers,
grok
The increase would be 0.
100(.9)(1.11) = 100 (almost)
The following year would still use 100 as its standard for comparison.
RIP Mr. Bogle.
Re: 4.7% SS COLA?
As of today, the COLA would be 2.1%, comparing the May release figures (Feb, Mar April) to last years average for (July Aug Sept). A lot can change between and September. If the trend of the last few months continues, 4.8% is certainly achievable
Re: 4.7% SS COLA?
Does the SS taxable base also increase by the COLA amount ?
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Re: 4.7% SS COLA?
No. The amount of your salary subject to Social Security is adjusted annually by a different metric -- the National Average Wage Index, which measures changes in wages.
NAWI is also used to adjust your past earnings until you turn 60, so that $10,000 you earned in 2000 might show as $20,000 in figuring your SS benefit (fake numbers, I did not look it up).
To make things even more fun, your tax brackets are adjusted using chained CPI, which is lower than the CPI-W used to compute SS COLA. And none of these use CPI-E, a measure designed around a market basket of goods applicable to the elderly.
Re: 4.7% SS COLA?
I see. They are trying to maximize receipts and minimize outlays...trueblueky wrote: ↑Sun May 16, 2021 12:18 pmNo. The amount of your salary subject to Social Security is adjusted annually by a different metric -- the National Average Wage Index, which measures changes in wages.
NAWI is also used to adjust your past earnings until you turn 60, so that $10,000 you earned in 2000 might show as $20,000 in figuring your SS benefit (fake numbers, I did not look it up).
To make things even more fun, your tax brackets are adjusted using chained CPI, which is lower than the CPI-W used to compute SS COLA. And none of these use CPI-E, a measure designed around a market basket of goods applicable to the elderly.
Re: 4.7% SS COLA?
Money is fungible |
Abbreviations and Acronyms
Re: 4.7% SS COLA?
I check the National Active and Retired Federal Employees (NARFE) web site monthly to see how the CPI-W changes on a month-to-month basis. The chart at the bottom of the page shows "% Toward 2022 COLA". Understanding that the COLA will be based on the change in average of the months of July, August, and September, this is the best resource I have found to easily track the COLA prior to the final amount being announced each October. Here's the site:
https://www.narfe.org/legislation/?fa=v ... le&id=2588
The CPI for May is scheduled to be released at 8:30 A.M. on June 10. Let's see if the trend continues.
Re: 4.7% SS COLA?
thank youOicuryy wrote: ↑Sun May 16, 2021 12:33 pmhttps://seniorsleague.org/assets/Loss-o ... -Study.pdf
Ron
RIP Mr. Bogle.
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Re: 4.7% SS COLA?
The inflation adjustment for I-Bonds works differently than the COLA for Social Security. Although the COLA for Social Security carries forward what a negative adjustment would have been and uses it to offset future positive adjustments, I-Bonds do not carry forward a negative inflation adjustment.grok87 wrote: ↑Sun May 16, 2021 7:04 amAh i see. Thanks for the correction.#Cruncher wrote: ↑Sun May 16, 2021 6:57 am That's not quite how it works. For example as shown above, the CPI-W fell 0.41% from 2014 to 2015 so there was no COLA for 2016. However, the COLA for 2017 was not based on the 0.76% increase 2015 to 2016. It was only 0.3% based on the increase from 2014 to 2016 (0.3% = 235.057 / 234.242 - 1). The bottom of this SSA webpage shows the COLAs since 1975.
How would it work for ibonds in this scenario?
For example, the semi-annual inflation adjustment for I-Bonds announced in May 2009 was -2.78%. That was the difference in the CPI-U for September 2008 (218.783) and March 2009 (212.709). For the six month that I-Bonds used that inflation adjustment, the redemption value of I-Bonds did not increase, ignoring increases due to the phase-out of an early redemption penalty. No I-Bond had a fixed rate that was high enough to completely offset the negative inflation adjustment. The interest rate of all I-Bonds was zero.
The semi-annual inflation adjustment for I-Bonds announced in November 2009 was 1.53%. For the six month that I-Bonds used that inflation adjustment, they had an interest rate based on that inflation adjustment. The negative inflation adjustment announced in May 2009 had no effect on later interest rates.
Re: 4.7% SS COLA?
thanks, that's very helpful.FactualFran wrote: ↑Sun May 16, 2021 5:58 pmThe inflation adjustment for I-Bonds works differently than the COLA for Social Security. Although the COLA for Social Security carries forward what a negative adjustment would have been and uses it to offset future positive adjustments, I-Bonds do not carry forward a negative inflation adjustment.grok87 wrote: ↑Sun May 16, 2021 7:04 amAh i see. Thanks for the correction.#Cruncher wrote: ↑Sun May 16, 2021 6:57 am That's not quite how it works. For example as shown above, the CPI-W fell 0.41% from 2014 to 2015 so there was no COLA for 2016. However, the COLA for 2017 was not based on the 0.76% increase 2015 to 2016. It was only 0.3% based on the increase from 2014 to 2016 (0.3% = 235.057 / 234.242 - 1). The bottom of this SSA webpage shows the COLAs since 1975.
How would it work for ibonds in this scenario?
For example, the semi-annual inflation adjustment for I-Bonds announced in May 2009 was -2.78%. That was the difference in the CPI-U for September 2008 (218.783) and March 2009 (212.709). For the six month that I-Bonds used that inflation adjustment, the redemption value of I-Bonds did not increase, ignoring increases due to the phase-out of an early redemption penalty. No I-Bond had a fixed rate that was high enough to completely offset the negative inflation adjustment. The interest rate of all I-Bonds was zero.
The semi-annual inflation adjustment for I-Bonds announced in November 2009 was 1.53%. For the six month that I-Bonds used that inflation adjustment, they had an interest rate based on that inflation adjustment. The negative inflation adjustment announced in May 2009 had no effect on later interest rates.
cheers,
grok
RIP Mr. Bogle.
Re: 4.7% SS COLA?
Good point, Fran. A negative inflation rate doesn't have a 0% floor (as does the SS COLA). If negative, it is still combined with each I Bond's fixed rate to determine the composite rate for the next six months. Only the resulting composite rate has a 0% floor. (See Combining the two rates.) To illustrate, here are the details for the 12 month period May 2009 - May 2010 for two $25 [*] I Bonds: a 3.6% Fixed Rate Bought May 2000 (the largest fixed rate ever issued) and a 0.0% Fixed Rate Bought May 2008 (the smallest possible fixed rate).FactualFran wrote: ↑Sun May 16, 2021 5:58 pmFor example, the semi-annual inflation adjustment for I-Bonds announced in May 2009 was -2.78%. ... No I-Bond had a fixed rate that was high enough to completely offset the negative inflation adjustment. The interest rate of all I-Bonds was zero. (underline added)
Code: Select all
Row Col A Col B Col C Formulas in column B
1 Semi-annual inflation rate 5/2009 (2.78%)
2 Semi-annual inflation rate 11/2009 1.53%
3 Bought May 2000 May 2008
4 Fixed rate 3.60% 0.00%
5 Composite rate 5/2009 if no floor (2.06%) (5.56%) =ROUND(B$4+2*$B1+B$4*$B1,4)
6 Composite rate 11/2009 6.72% 3.06% =ROUND(B$4+2*$B2+B$4*$B2,4)
7 Value $25 bond 5/2009 44.92 26.24
8 Value 11/2009 if no floor 44.46 25.51 =ROUND(B7*(1+B5/2),2)
9 Value 5/2010 if no floor 45.95 25.90 =ROUND(B8*(1+B6/2),2)
10 Actual value 5/2010 46.43 26.64
11 Benefit of composite rate floor 1.0% 2.9% =B10/B9-1
Code: Select all
Row Col A Col B Col C Formulas in column B
16 Semi-annual inflation rate 5/2015 (0.80%)
17 Semi-annual inflation rate 11/2015 0.77%
18 Bought May 2000 May 2008
19 Fixed rate 3.60% 0.00%
20 Composite rate 5/2015 if no floor 1.97% (1.60%) =ROUND(B$19+2*$B16+B$19*$B16,4)
21 Composite rate 11/2015 5.17% 1.54% =ROUND(B$19+2*$B17+B$19*$B17,4)
22 Value $25 bond 5/2015 61.16 29.38
23 Value 11/2015 if no floor 61.76 29.14 =ROUND(B22*(1+B20/2),2)
24 Value 5/2016 if no floor 63.36 29.36 =ROUND(B23*(1+B21/2),2)
25 Actual value 5/2016 63.36 29.61
26 Benefit of composite rate floor 0.0% 0.9% =B25/B24-1
- SS benefits are indexed to the CPI-W while I Bonds (and TIPS) are indexed to the CPI-U. (See Why does BLS provide both the CPI-W and CPI-U?.)
- SS benefits are indexed annually based on the change versus the prior year of the CPI-W average for July, August, and September. The increase is applied the following January. The I Bond inflation rate changes every six months and equals the the CPI-U change in the preceding September to March and March to September periods. It is applied starting each May and November as each I Bond reaches its 6 month anniversary. (See When does my bond change rates?.)
Re: 4.7% SS COLA?
CPI-W for May 2021 was announced this morning as an increase of 0.91%. With 4 months (June, July, August, and September) to go, the SS and Federal pension COLA currently stands at 4.03%.
Re: 4.7% SS COLA?
I get 3.10% comparing Mar, April, May 21 (avg 261.291) against Jul, Aug, Sept 2020 (avg 253.412)
Re: 4.7% SS COLA?
https://www.narfe.org/legislation/?fa=v ... le&id=2588
Re: 4.7% SS COLA?
Those taking the over may make out, as May's inflation rate just came in even higher: https://www.usnews.com/news/economy/art ... nd-the-fed
Whether this is a transitory post-pandemic effect or a sustained trend is unknown.
Question: if this make people more likely to expect the Fed to raise interest rates down the road,.what does that do to near-term sales of new treasuries?
Whether this is a transitory post-pandemic effect or a sustained trend is unknown.
Question: if this make people more likely to expect the Fed to raise interest rates down the road,.what does that do to near-term sales of new treasuries?
"No man is free who must work for a living." (Illya Kuryakin)
Re: 4.7% SS COLA?
If you assume that the .9 monthly increase for the last 2 months will continue through the 3rd quarter, the 2022 COLA would be closer to 6.8%.
And with wage inflation now spiking due to 9.3mm of unfilled jobs, it is more likely that this will further accelerate the increases a couple months down the road. Shortages in raw materials coupled with wage inflation make for a very inflationary combo.
Employers will not only be forced to raise wages, they will also be forced into doing considerable training since the available wage pool tends to fall short on the skills needed for today's jobs. This all results in reduced productivity gains. Further, all the state level increases in paid time off will have a factor as the various laws kick in.
You might also factor in the reluctance of the fed to raise rates, unlike their response in typical inflationary cycles.
But don't spend it yet!
And with wage inflation now spiking due to 9.3mm of unfilled jobs, it is more likely that this will further accelerate the increases a couple months down the road. Shortages in raw materials coupled with wage inflation make for a very inflationary combo.
Employers will not only be forced to raise wages, they will also be forced into doing considerable training since the available wage pool tends to fall short on the skills needed for today's jobs. This all results in reduced productivity gains. Further, all the state level increases in paid time off will have a factor as the various laws kick in.
You might also factor in the reluctance of the fed to raise rates, unlike their response in typical inflationary cycles.
But don't spend it yet!
Re: 4.7% SS COLA?
Thank you! I had included the NARFE link in a response in May. Instead of providing the link today, I tried to copy in the full chart but had issues with formatting and gave up after 15 minutes.vested1 wrote: ↑Thu Jun 10, 2021 9:37 amhttps://www.narfe.org/legislation/?fa=v ... le&id=2588
I retired in May of 2008 from the Federal Government. The COLA impacts my pension as well as the monthly Social Security payment. Highest COLA since retirement was the next year, 2009, when it hit 5.8%. The average since retirement has been 1.71%, which included three years of zero increase. I know there can be bad consequences with higher inflation, but this year's numbers (so far) are helping to ease the conscious sting of the no/little increase years.
Re: 4.7% SS COLA?
I'm currently trying to decide whether to continue to delay my claim until age 70 in July of 2022 or claim at 69.5 in January of 2022. I did a conservative estimate of what my age 70 benefit would be at retirement in early 2016, and have been pleasantly surprised by the additional growth due to COLA. I don't see the pace of inflation for CPI-W dropping off a cliff before September, not that I would know, but the COLA raise will likely be more than the additional 4% bump for waiting another 6 months from January until July.pahkcah wrote: ↑Thu Jun 10, 2021 2:29 pmThank you! I had included the NARFE link in a response in May. Instead of providing the link today, I tried to copy in the full chart but had issues with formatting and gave up after 15 minutes.vested1 wrote: ↑Thu Jun 10, 2021 9:37 amhttps://www.narfe.org/legislation/?fa=v ... le&id=2588
I retired in May of 2008 from the Federal Government. The COLA impacts my pension as well as the monthly Social Security payment. Highest COLA since retirement was the next year, 2009, when it hit 5.8%. The average since retirement has been 1.71%, which included three years of zero increase. I know there can be bad consequences with higher inflation, but this year's numbers (so far) are helping to ease the conscious sting of the no/little increase years.
My brother thinks I'm crazy for delaying this long, but that may be due to the fact that he filed at FRA.
Personal finances make claiming 6 months early tempting because we leased a new car, (I know, I know), and the three year term is up in January. We plan on buying the car because we love it. We leased to help keep a lid on expenses due to the delay in SS, and my projections, which assumed zero SS COLA since we retired have of course made the eventual benefit even better. We have great credit but keep income down to a reasonable level, so a car purchase loan should be interesting.
The difference in my SS benefit would be about $120 a month for waiting that additional 6 months, so I have some thinking, and probably a good amount of mental gymnastics in the near future to justify my impending decision. I may fall victim to unreasonable pride at holding out until I wring the greatest amount possible from SS, shooting myself in the foot in the process. I'm currently receiving 1/2 of my wife's PIA until I file for my own benefit.
Re: 4.7% SS COLA?
Here's another interesting link that shows the history of SS COLA increases.
https://www.ssa.gov/cola/
14.3% in 1980, (and likely 14.2 in Medicare Part B).
https://www.ssa.gov/cola/
14.3% in 1980, (and likely 14.2 in Medicare Part B).
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Re: 4.7% SS COLA?
My thoughts:Elric wrote: ↑Thu Jun 10, 2021 10:17 am Those taking the over may make out, as May's inflation rate just came in even higher: https://www.usnews.com/news/economy/art ... nd-the-fed
Whether this is a transitory post-pandemic effect or a sustained trend is unknown.
Some of the increase in food prices reflects shutdown of meat packing plants early in the pandemic. Additionally, industry had to adjust the proportion of its packaging from "for restaurant use" to "for home use" and now is adjusting back. This has caused hiccups, so that, even now, shelves are not as filled.
The lumber situation will resolve.
Used car prices are up because of supply chain issues for new car assembly plants. This will resolve.
People still have childcare issues related to the pandemic. The end of the school year will resolve some of that.
Wages were already going up. Some from corporate action. Some from changes in state and local minimum wage laws. This is likely permanent.
Overall, I think is transitory.
Re: 4.7% SS COLA?
Quick question,
When estimating what effect the SS cola has on one's SS, is it based on the amount we were due at FRA or any amount due after the increases due to delaying?
example: if FRA SS benefit is a $1000/month and you delayed 2 years (approx +16%) for a benefit of 1160/month; if cola was 3%, what would your new monthly benefit be?
Thanks
When estimating what effect the SS cola has on one's SS, is it based on the amount we were due at FRA or any amount due after the increases due to delaying?
example: if FRA SS benefit is a $1000/month and you delayed 2 years (approx +16%) for a benefit of 1160/month; if cola was 3%, what would your new monthly benefit be?
Thanks
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Re: 4.7% SS COLA?
It is based on your current monthly amount unless you started in the last year, in which case, it's apportioned.RCL wrote: ↑Thu Jun 10, 2021 5:35 pm Quick question,
When estimating what effect the SS cola has on one's SS, is it based on the amount we were due at FRA or any amount due after the increases due to delaying?
example: if FRA SS benefit is a $1000/month and you delayed 2 years (approx +16%) for a benefit of 1160/month; if cola was 3%, what would your new monthly benefit be?
Thanks
$1160 * 1.03 = $1194.80
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Re: 4.7% SS COLA?
I wish there is a 4.7% SS COLA, that way people can use it to prove to their cheapskate employers the proper inflation rate and get the appropriate raise based on that and not their fantasyland estimation of inflation.
Last year my employer gave me a 1.5% raise, granted I was only there for half a year, but then 3% annualized, bet you they are going to try to give me a 2-3% raise next year BUT guess what... my rent is slated to go up by 20% My lease is up in November but based on what they are asking for existing vacancies...it's absolutely shocking. Real inflation including housing is more like 10% in my view.
Re: 4.7% SS COLA?
Thank you, just doing some estimates for 2022 incomestrueblueky wrote: ↑Thu Jun 10, 2021 5:59 pmIt is based on your current monthly amount unless you started in the last year, in which case, it's apportioned.RCL wrote: ↑Thu Jun 10, 2021 5:35 pm Quick question,
When estimating what effect the SS cola has on one's SS, is it based on the amount we were due at FRA or any amount due after the increases due to delaying?
example: if FRA SS benefit is a $1000/month and you delayed 2 years (approx +16%) for a benefit of 1160/month; if cola was 3%, what would your new monthly benefit be?
Thanks
$1160 * 1.03 = $1194.80
Re: 4.7% SS COLA?
Here is the CPI-W data this year through May.
255.296, 256.843, 258.935, 261.237, 263.612
If the current value remains unchanged through September, the COLA would be 4.00%.
255.296, 256.843, 258.935, 261.237, 263.612
If the current value remains unchanged through September, the COLA would be 4.00%.
Enjoying the Outdoors
Re: 4.7% SS COLA?
My guess is that the COLA for 2022 will be less than 2%.
From Paul Krugman's current column in the Times:
But the Fed’s view has been that this episode, like the inflation blip of 2010-11, will soon be over.
And it’s now looking as if the Fed was right. Lumber prices have plunged in recent weeks. Prices of industrial metals like copper are coming down. Prices of used cars are still very high, but their surge has stalled and they may have peaked. Core inflation wins again.
https://www.nytimes.com/2021/06/21/opin ... n-fed.html
From Paul Krugman's current column in the Times:
But the Fed’s view has been that this episode, like the inflation blip of 2010-11, will soon be over.
And it’s now looking as if the Fed was right. Lumber prices have plunged in recent weeks. Prices of industrial metals like copper are coming down. Prices of used cars are still very high, but their surge has stalled and they may have peaked. Core inflation wins again.
https://www.nytimes.com/2021/06/21/opin ... n-fed.html
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Re: 4.7% SS COLA?
It's sitting at 4.0% now. Assume straight line for June - September, it would need to go down 0.67% per month. (Because it is based on the average of July, August, September, it would need to decline by more than 2% in four months, again assuming straight-line). We will see.cbeck wrote: ↑Mon Jun 21, 2021 10:55 pm My guess is that the COLA for 2022 will be less than 2%.
From Paul Krugman's current column in the Times:
But the Fed’s view has been that this episode, like the inflation blip of 2010-11, will soon be over.
And it’s now looking as if the Fed was right. Lumber prices have plunged in recent weeks. Prices of industrial metals like copper are coming down. Prices of used cars are still very high, but their surge has stalled and they may have peaked. Core inflation wins again.
https://www.nytimes.com/2021/06/21/opin ... n-fed.html
Re: 4.7% SS COLA?
Not quite. COLAs track with CPI-W. That may or may not have anything to do with your own actual expenses.
That what some argue.2) The COLA is set to the wrong benchmark. It does not track expenses for retired senior citizens accurately, and therefore helps less and less each year.
That's a personal choice. For some that makes sense. For others, not as much.From this, I concluded that Social Security is best kept as longevity insurnce, a stream of income to be invoked as late as possible, to make it as large as possible. It shouldn't be used as your sole income stream if you can help it. It is best used to prevent you from depleting your investments.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: 4.7% SS COLA?
You realize that COLA and "the additional 4% bump" aren't mutually exclusive, right?
- If you delay you get both the COLA and the bump.
- If you start at 69.5, you still get the COLA.
For the rest of your life...The difference in my SS benefit would be about $120 a month for waiting that additional 6 months
And potentially, for the rest of your spouse's life in some situations...
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: 4.7% SS COLA?
vested1 - No matter when you choose to start collecting your Social Security (SS) payments, make sure to check and see that you receive the COLA (assuming there is one) and your delayed retirement credits in January of the next year. There is another thread that deals with several people (me included) who did not receive their delayed retirement credit increases this January as expected. After waiting until June to see if SS would update my payment, I contacted people at the local SS office and was able to resolve the issue within two weeks. Just received a notification letter from SS today indicating my monthly payment would be increasing in July, and that I would receive a separate check for the months my payment did not include the delayed credits.JoeRetire wrote: ↑Tue Jun 22, 2021 10:53 amYou realize that COLA and "the additional 4% bump" aren't mutually exclusive, right?
- If you delay you get both the COLA and the bump.
- If you start at 69.5, you still get the COLA.
For the rest of your life...The difference in my SS benefit would be about $120 a month for waiting that additional 6 months
And potentially, for the rest of your spouse's life in some situations...
Re: 4.7% SS COLA?
June CPI-W number is an increase of 1.06%. Current number toward 2022 COLA (according to National Active and Retired Federal Employees Association) is 5.13%, but still 3 months to go.
https://www.narfe.org/legislation/?fa=v ... le&id=2588
https://www.narfe.org/legislation/?fa=v ... le&id=2588
Re: 4.7% SS COLA?
July CPI-W number is an increase of .51%. Current number toward 2022 COLA (according to National Active and Retired Federal Employees Association) is 5.67%, but still 2 months to go.
The Consumer Price Index for August 2021 is scheduled to be released on Tuesday, September 14, 2021 at 8:30 a.m. (ET).
Chart with numbers can be found here:
https://www.narfe.org/legislation/?fa=v ... le&id=2588
The Consumer Price Index for August 2021 is scheduled to be released on Tuesday, September 14, 2021 at 8:30 a.m. (ET).
Chart with numbers can be found here:
https://www.narfe.org/legislation/?fa=v ... le&id=2588
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Re: 4.7% SS COLA?
Two months to go until we know. Since the COLA is based on the quarterly average (July, August, September), the August result is a good estimate.pahkcah wrote: ↑Thu Aug 12, 2021 4:34 pm July CPI-W number is an increase of .51%. Current number toward 2022 COLA (according to National Active and Retired Federal Employees Association) is 5.67%, but still 2 months to go.
The Consumer Price Index for August 2021 is scheduled to be released on Tuesday, September 14, 2021 at 8:30 a.m. (ET).
Chart with numbers can be found here:
https://www.narfe.org/legislation/?fa=v ... le&id=2588
Social Security usually makes its COLA announcement on the first workday on/after October 10 (Sunday this year, followed by Columbus Day) -- likely Tuesday, October 12.
Re: 4.7% SS COLA?
1) The COLA does not work as advertised. Somehow the things I buy are not in the CPI and go up faster.wolf359 wrote: ↑Sun May 16, 2021 5:25 am The fact that SS has a COLA is known. Exactly what the rate will be next year is pure speculation.
IMPORTANT NOTE: I am not currently claiming Social Security, so someone who is should confirm whether or not my comments below are actually accurate.
There are two things to note about the COLA.
1) If the COLA works as advertised, then your buying power should stay substantially the same. A large or a small COLA should not make any effective difference in your standard of living, because it's supposed to track with your actual expenses.
2) The COLA is set to the wrong benchmark. It does not track expenses for retired senior citizens accurately, and therefore helps less and less each year.
From this, I concluded that Social Security is best kept as longevity insurnce, a stream of income to be invoked as late as possible, to make it as large as possible. It shouldn't be used as your sole income stream if you can help it. It is best used to prevent you from depleting your investments.
2) There is a second, very insidious component to SS -- the cost of Medicare. As a lifelong saver and investor, my retirement income is not at an extremely low level. I have been collecting SS for 13 years, and every year the payment has gone down, COLA or no COLA. Why is this? Medicare costs keep rising. And since I am fortunate enough to have to pay IRMAA (a surcharge on Medicare rates), the IRMAA charges have increased faster than the COLA has adjusted SS upwards. If I live long enough I may end up with all of the benefit going to Medicare. .
3) I concluded that Social Security is best kept as longevity insurnce, a stream of income to be invoked as late as possible, to make it as large as possible. It shouldn't be used as your sole income stream if you can help it. It is best used to prevent you from depleting your investments.
I keep seeing this logic, but the problem with it is that every strategy for implementation I have ever seen involves depleting one's investments early in retirement in order to avoid claiming SS early. Essentially guaranteeing depletion.
Personally, I took the risk that I could earn a higher return on my own investment than the increase in SS benefits, and that risk paid off. I lived on Uncle's money while mine compounded.
Answering a question is easy -- asking the right question is the hard part.
Re: 4.7% SS COLA?
Quick calculation:
August CPI-W is in at 268.387.
If the Sept figure published next month comes in at this same figure, the COLA for 2022 will be 5.8%.
If the Sept figure rises the same .2% as August did, the COLA will be 5.9%.
August CPI-W is in at 268.387.
If the Sept figure published next month comes in at this same figure, the COLA for 2022 will be 5.8%.
If the Sept figure rises the same .2% as August did, the COLA will be 5.9%.