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Old 03-11-2016, 02:31 PM
 
Location: USA
271 posts, read 314,719 times
Reputation: 153

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You turn 62 in Sept 2016 take SS the maximum benefit is $2102. If you wait till 66 $2639. 70 $3576.

If Social Security gives a 2% inflation increase sometime in 2017 your $2102 check should increase by 2% in 2017 if they do it again the next year your check should be appx. 4% more in 2018 and so on.
If thats the case which month does that increase apply? Jan or your birthday month Sept.

If you waited until 66 and your payment is $2639, does that amount increase by the same 2% inflation rate as the $2102 your would receive at 62 would? Or does that number have projected inflation built into it?
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Old 03-12-2016, 07:54 AM
 
210 posts, read 150,945 times
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Yearly cost of living increases are assessed at the end of the third quarter but not awarded until January 1 of the following year.


I can only tell you how the Social Security calculator, AnyPIA, handles the 8% between FRA and age 70. It also awards the 8% at the end of the calendar year and does not appear to award partial years. It also does not compound the 8%. The only year that it awards the full 8% based on birthday instead of end of year is the year you turn 70. So, on your birthday the year you turn 70, you get the full last 8%. If your FRA was 66 years of age, this multiplies your benefit by 1.32 (or a uncompounded gain of .32 of your benefit).


AnyPIA can be downloaded at:
https://www.ssa.gov/oact/anypia/download.html


You will need a recent SS statement to hand enter your contributions for each year you worked. This is tedious but only needs to be done once and, then, you can get benefit levels for your various scenarios.


Concerning your final question, I'm not sure what you are asking. Your numbers are not exactly the 25% reduction but if they include projections of inflation, that is hard to tell because if these numbers are from your SS statement, the SSA footnotes the computation assumptions and mentions wage projections that might account for the difference:
Quote:
What we assumed -If you have enough work credits, we
Quote:
estimated your benefit amounts using your average earnings
over your working lifetime. For 2016 and later (up to
retirement age), we assumed you’ll continue to work and make
about the same as you did in 2014 or 2015. We also included
credits we assumed you earned last year and this year.

Last edited by AnnaLee2; 03-12-2016 at 08:54 AM..
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Old 03-12-2016, 09:18 AM
 
Location: Charleston, SC
1,362 posts, read 767,246 times
Reputation: 2428
Be careful when assuming a 2% COLA increase. Since 2010 there has been only 1 increase of 2% or more.

Also, your increase from 66 to 70 seems to be a little more than typical....where did you get the $3576 number from ?? That's almost $1000 per month and doesn't seem to match the normal progression.

Just to touch all the bases here -- the 48 months between 66 and 70 would bring you $126,672.
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Old 03-12-2016, 09:40 AM
 
13,912 posts, read 7,405,593 times
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Quote:
Originally Posted by FiveLoaves View Post
Be careful when assuming a 2% COLA increase. Since 2010 there has been only 1 increase of 2% or more.

Also, your increase from 66 to 70 seems to be a little more than typical....where did you get the $3576 number from ?? That's almost $1000 per month and doesn't seem to match the normal progression.

The numbers look about right for 66 to 70. My FRA is 66 8 months so it's a bit lower ratio.

COLA doesn't particularly matter much. In theory, it spends the same no matter what the inflation rate. It's a trap to think you're getting more money.
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Old 03-12-2016, 09:50 AM
 
Location: Charleston, SC
1,362 posts, read 767,246 times
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Yeah, his numbers are around 36% so I guess that's about right.

Agree that COLA should be considered extra beer money and not much else-- HA !!
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Old 03-12-2016, 01:00 PM
 
Location: USA
271 posts, read 314,719 times
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I got the numbers from the social security website but my question is more about the changes in payments if there are COLA adjustments.

Strictly an example if you turn 62 this year take the benefits and start collecting you get $2102 a month. Next year 2017 IF THERE IS A 2% COLA the check should be about $2144. The following year 2018 the check should be about $2187. The following year 2019 again IF there is 2% COLA $2231. And in 2020 your check would be $2275.
So using these hypothetical and estimated numbers at age 66 your check would be $2275 if you started collecting at 62.

Turn the clock back to today and you decide not to collect but wait to until 2020 FRA age 66 and the projected amount on your current statement is $2639.

The question is since SS gave 2% increases from 2016 to 2020 and those who started collecting then had their check increase from $2102 to $2275 due to these COLAS will the person who decided not to take it at 62 but wait till 66 get the same COLA adjustments to his projected FRA amount of $2639. Will he get the same $2639 or will he receive $2639 plus all the COLA adjustments? Possibly $200 more.
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Old 03-12-2016, 01:18 PM
 
Location: Ohio
19,911 posts, read 14,235,190 times
Reputation: 16091
Quote:
Originally Posted by Cameron60 View Post
If Social Security gives a 2% inflation increase sometime in 2017 your $2102 check should increase by 2% in 2017 if they do it again the next year your check should be appx. 4% more in 2018 and so on. If thats the case which month does that increase apply? Jan or your birthday month Sept.
All COLA increases apply in January for everyone, regardless of their birth-month.
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Old 03-12-2016, 01:24 PM
 
Location: Ohio
19,911 posts, read 14,235,190 times
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Quote:
Originally Posted by Cameron60 View Post
The question is since SS gave 2% increases from 2016 to 2020 and those who started collecting then had their check increase from $2102 to $2275 due to these COLAS will the person who decided not to take it at 62 but wait till 66 get the same COLA adjustments to his projected FRA amount of $2639. Will he get the same $2639 or will he receive $2639 plus all the COLA adjustments? Possibly $200 more.
The answer is no, and in fact you risk losing money if the Wage Index declines. A good example is this:

2008 41,334.97
2009 40,711.61
2010 41,673.83
2011 42,979.61
2012 44,321.67
2013 44,888.16
2014 46,481.52

When you apply for benefits, your wages are indexed against the 2nd year prior to retirement. That means if you applied for benefits in 2011, you got ripped off, because the index decreased in 2009.

Those people who thought they'd get more money by waiting until Age 70 in 2011, got a big nasty surprise, because they got less money than if they'd retired at Age 69 in 2010.
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Old 03-12-2016, 05:07 PM
 
10,817 posts, read 8,063,256 times
Reputation: 17029
Quote:
Originally Posted by Mircea View Post
The answer is no, and in fact you risk losing money if the Wage Index declines. A good example is this:

2008 41,334.97
2009 40,711.61
2010 41,673.83
2011 42,979.61
2012 44,321.67
2013 44,888.16
2014 46,481.52

When you apply for benefits, your wages are indexed against the 2nd year prior to retirement. That means if you applied for benefits in 2011, you got ripped off, because the index decreased in 2009.

Those people who thought they'd get more money by waiting until Age 70 in 2011, got a big nasty surprise, because they got less money than if they'd retired at Age 69 in 2010.
You're referring to the "bend point" calculations used in determining benefit amounts. Bend point formulas use the average wage indices you quote above but they are applied to the 2nd year preceding the year a person first becomes eligible for benefits (normally age 62), NOT the year the person applies for benefits.

The formula is then used to determine a person's PIA (Primary Insurance Amount) at FRA (full retirement age).
The full method for calculating the FRA amount is shown here.

Then when a person applies for benefits, the amount their benefit is reduced (if under FRA) or increased (if over FRA), is applied.

It's a complex formula but basically it means that the statement you made above about a person receiving a lower benefit at age 70 than 69 due to wage indexing is incorrect. Again, the wage indexing year is determined by when the person first becomes eligible for benefits, not when they apply.

Here's an example using my age:
I turned 62 and first became eligible for benefits in 2010.
I reached 66 - my FRA - in 2014.
I have not yet filed for benefits. I'll probably do so in 2018 at age 70.
My benefit wage indexing year is and will remain 2008 (2nd year prior to my reaching age 62).
My PIA was determined when I reached my FRA at age 66, using 2008 wage indexing. Any COLA adjustments will be applied to the PIA.
My benefit at age 70 will be my COLA-adjusted PIA + delayed retirement credits. If I retire at 69, I will have fewer delayed retirement credits and my benefit will be smaller.
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Old 03-13-2016, 01:32 AM
 
Location: San Antonio
7,629 posts, read 14,379,886 times
Reputation: 18706
Quote:
Originally Posted by Mircea View Post
All COLA increases apply in January for everyone, regardless of their birth-month.
But ONLY if currently drawing on it, right? In otherwords, if you do not draw your SS payment, does the increase still APPLY to what you can expect once you claim????
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