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I read that in some years if the government believes there was inflation there would be a cost of living increase for people CURRENTLY collecting Social Security. But what impact will the the cost of living increases have on people who are not yet collecting Social Security?
Here is an example to explain my question:
Lets say a person was five years from collecting Social Security (age 57) and was told they would get $1290 a month at age 62 if they collect based on the last 35 years of earning. For the next five years they earned exactly the same amount of money each year. For this example, lets assume the official Social Security cost of living amount went up 2% each of the next five years. If my pay was exactly the same for the next five years before starting to collect benefits, would the $1290 a month figure they quoted me go up to about $1419.00? ($1290 x 110%)
Or would the 2% annual increases only impact the people who are currently collecting Social Security and my increases would only happen if my pay went up during my last five years of working before starting to collect SS benefits. Please explain.
It would not likely go up the amount in your example, but yes, the predicted amount does increase the difference of predicted inflation vs actual. Just as the amount predicted would decrease if actual inflation was less that predicted. The closer you are to collecting, the more accurate the prediction is, as in all things. The difference is that those collecting are not given predicted SS payments for years to come. The SSA only predicts for those not collecting as a tool, not as a guarantee. The amount you collect is based on a simple formula determined by your 35 highest,inflation adjusted income years. Until those specific years are set, and you collection date arrives, the number is always in flux. The closer you make to maximum SS income, for all 35 years, the lower that number fluctuates.
If you read the statement it says your figure is based on you continuing your current salary until your FRA. So I would think no it would not adjust for COL until after you start collecting.
I did a google search and found a number of sites that say your estimate is shown in today's dollars and when you file your benefit will be adjusted to reflect any COLA increases. That's one of many reasons it's an called an estimate.
I did a google search and found a number of sites that say your estimate is shown in today's dollars and when you file your benefit will be adjusted to reflect any COLA increases. That's one of many reasons it's an called an estimate.
My predicted benefits keep going up every year - for retiring at age 62 the estimate has gone up almost $100 a month since 2008 or so. I make more than the max so my current salary has not increased unless they increase the income threshold where you stop paying SS taxes. I'm assuming the increase is due to inflation.
I believe the SSA prediction assumes a certain inflation amount, which may adjust occasionally. But I'm not absolutely positive. Anyone?
Quote:
Originally Posted by Full Spring Greenery
I spent an hour online trying to understand this and got no where. Anyone?
Quote:
Originally Posted by DaveinMtAiry
That's good to hear. Links?
Take a look at https://www.ssa.gov/pubs/EN-05-10070-1950.pdf
where it says:
"You are eligible for cost-of-living benefit increases starting with the year you
become age 62. This is true even if you do not get benefits until your full
retirement age or even age 70. Cost-of-living increases are added to your benefit
beginning with the year you reach 62 up to the year you start receiving benefits."
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