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With possibly year over year significant Cola increases, how does it impact pre 62 people? People who are still paying in or the FIRE group of early retirees? Are the Colas carried forward to the pre - retirees final payment calculations?
With possibly year over year significant Cola increases, how does it impact pre 62 people? People who are still paying in or the FIRE group of early retirees? Are the Colas carried forward to the pre - retirees final payment calculations?
My understanding is that the answer is "NO". COLA's are for people who are currently retired and drawing SS. If you're still working and paying into SS, then it's not an immediate benefit to you, but your earnings going forward should (hopefully) be higher than they would otherwise be and therefore this would help to raise your AIME over time.
I suggest that you look up how SS benefits are calculated.
My understanding is that the answer is "NO". COLA's are for people who are currently retired and drawing SS. If you're still working and paying into SS, then it's not an immediate benefit to you, but your earnings going forward should (hopefully) be higher than they would otherwise be and therefore this would help to raise your AIME over time.
I suggest that you look up how SS benefits are calculated.
I’ve reviewed the information and it’s lacking - things could get very very strange for payout amounts if we have several years of mega Colas and then returning to the traditional 2-3%.
With possibly year over year significant Cola increases, how does it impact pre 62 people? People who are still paying in or the FIRE group of early retirees? Are the Colas carried forward to the pre - retirees final payment calculations?
Biggest impact is how SS converts your salary history. That first year job salary 35-40 years later doesn't look so paltry.
What you need is a nice 35 year work history. in a 40 year history fill in any zeroes. Also you can finish your career with promotions to high end salary. If you continue to make at salary cutoff you go to the top end of SS calculations.
People in the FIRE group can retire too early if they don't have that 35 year work history. Does not work to start at 20 then work to 40 & only have 20 working years. Need to keep working to 60! Also, figure what you do for the 40 years to contribute something. What value are you contributing? Are you doing something you like & like what you do?
Then you need to consider preparation for health care costs. Need a HSA to go with the 401K. Once you get to 65 & Medicare starts you can no longer contribute to the HSA. Given the restrictions may need 40 years to have a sizeable 401K/HSA to take into your retirement years.
I’ve reviewed the information and it’s lacking - things could get very very strange for payout amounts if we have several years of mega Colas and then returning to the traditional 2-3%.
if it goes back down to 2-3 %,then it means inflation is no longer a threat and your SS $ reflects such
I’ve reviewed the information and it’s lacking - things could get very very strange for payout amounts if we have several years of mega Colas and then returning to the traditional 2-3%.
Things would only "get strange" if you were not getting raises while everyone else was getting them. COLA's are given for a reason... and that reason is because the general cost of living went up. Usually, when the cost of living goes up, MOST people will get increases in their wages on which they pay SS taxes. This will help to increase their SS income whenever they decide to retire.
I'm 56 so obviously not collecting benefits yet , but I checked my estimated benefits last week on the SSA website and my expected benefit at age 70 went up 8.8% from last year. Very happy!
Remember though , after retirement age , colas are not applied based on the previous year …they are not compounded ..they are applied to your primary insurance amount and are not compounded
if it goes back down to 2-3 %,then it means inflation is no longer a threat and your SS $ reflects such
That’s incorrect, as the previous year colas are into perpetuity and compounding onto subsequent colas.
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