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When you accept pretty much the same return as markets give you and all similar investors get that is investing...when you try to get way above what markets hand you based on their natural cycles whether up or down , now you are leaving investing and entering speculating...
Speculating is where most get burned...
Just for clarity, for every dollar lost to attempting to beat the market there is another dollar won attempting to beat the market, because the sum of such speculations adds up to the market, before transaction costs. Add in fees and the sum is less than the total market.
Living in Nevada our house ended up losing half it’s value but now is finally made up the loss. If you just don’t panic and stay in your house and leave your investments alone it will come back. Now if you are unlucky enough to not have HI and get really sick this advice is useless.
Just for clarity, for every dollar lost to attempting to beat the market there is another dollar won attempting to beat the market, because the sum of such speculations adds up to the market, before transaction costs. Add in fees and the sum is less than the total market.
you get the point ... riding the typical cycles of the markets up and down is investing ...trying to time them is speculating , once you don't want those market returns every investor like you would get had you simply rode the wave .
Another '57 model! Our wage indexing factors are set this year using the 2017 average wage index and you can get them on the Social Security website here:
If you are still working and not collecting Social Security retirement yet, keep in mind that the SSA assumes that you will continue to work and uses your latest year's earnings in all future years as they calculate PIA. They are not always quick at getting the new calculations done each year, but you can effectively check them yourself by either using their calculator (ANYPIA) or by creating your own calculation using the indexing factors and bend points for this year. They'll start applying the annual COLA to this calculation starting next year. I actually retired 7 years ago, so my PIA is now set and will only go up by the annual COLA. Still contemplating when I might actually file for benefits!
Another '57 model! Our wage indexing factors are set this year using the 2017 average wage index and you can get them on the Social Security website here:
If you are still working and not collecting Social Security retirement yet, keep in mind that the SSA assumes that you will continue to work and uses your latest year's earnings in all future years as they calculate PIA. They are not always quick at getting the new calculations done each year, but you can effectively check them yourself by either using their calculator (ANYPIA) or by creating your own calculation using the indexing factors and bend points for this year. They'll start applying the annual COLA to this calculation starting next year. I actually retired 7 years ago, so my PIA is now set and will only go up by the annual COLA. Still contemplating when I might actually file for benefits!
Recessions can affect retirees who apply for benefits.
The people who applied for Social Security retirement benefits in 2011 got totally screwed, because they receive significantly less in benefits than the people who applied in 2010 or 2012.
Why? Because the Wage Index for 2009 decreased due to the recession.
That $20,000 you earned in 1984?
Social Security does not use that when they calculate your benefits. Social Security indexes your wages to the Wage Index so if, for example, you apply this year, that $20,000 morphs into $60,375 and it is the $60,375 that Social Security uses to calculate your average monthly wage and not the $20,000.
The Wage Index is published each year for the previous year in late November or early December.
Because that's true, if you apply now, they can't use the Wage Index for 2019, since it won't be published until next year. They can't use the Wage Index for 2018, because it won't be published for another several months. To be fair to everyone, they go back two years, and for 2019 that's 2017.
Generally, the Wage Index increase about 2% to 3% per year, but in 2009 it decreased:
The people who filed in 2011 got indexed to 2009 and they lost $50-$300/month in Social Security benefits.
You can apply for retirement benefits during a recession, because your wages are index two year prior to the recession. You can also apply the year after the recession ends.
It's that 2nd year after that you have to be wary.
Recessions don't always result in job losses. You've had a number of recessions where job losses were a few 100,000 and not Millions. Usually if Capital reallocation is the cause of the recession then you lose a lot of jobs, like in the Millions. That was your problem in 2008. You had Capital reallocation within the US, plus Capital flight, where Capital is actually leaving the US (headed to Southeast Asia) that caused Millions of job losses, and you can't pay your mortgage if you don't have a job, or if you have a job that pays less than the job you lost.
A liquidity crisis usually doesn't cause massive job losses, either, unless it's economy-wide or industry-wide.
Anyway, if job losses are severe enough to impact the Wage Index, you may want to apply for Social Security a year earlier than you planned, or delay by a year, so you don't lose money.
Just keep that in mind.
Interesting point. I didn't realize that and if we do go into a recession this bears upon my decision of when to start SS. I can't until early 2021, but am debating whether to delay beyond 2021 or not. If a recession should start in 2020 I could apply in 2021, or wait it out and apply later, but if it were a long recession, I might regret having to wait until 2 years AFTER it ends to avoid this scenario. I'm at least happy to have that choice, and can wait and see if we even go into a recession or not and have that one year time lag after it hits built in before I have to decide. The difference won't be huge, but since I'm not forced into filing at any particular time, I can use that knowledge to maximize my benefit to some degree.
I just wanted to clarify the application of Average Wage Indexing You really can't manipulate which year will be used for indexing as it is based on the year that the person is first eligible for benefits not the date of application. For retirement, first eligible age is 62, so people born in 1949 will use the wage indexing series from 2009. As you indicated, there is a 2 year lag so everyone's wages from age 60 on don't get the benefit of wage indexing. Any such wages are basically used in the calculation at face value.
PIA is initially calculated at age 62 using the indexed earnings and bend points from the year the retiree turned 62. After 62, PIA is adjusted annually with COLA like all Social Security benefits. (Additionally, PIA is recalculated annually if the person continues to work and the wages are higher than one of the 35 years used in the calculation. That calculation usually takes place later in the year.)
Those 62 year olds in 2011 are turning 70 this year. When their benefit is calculated, it still uses the 2009 wage indexing series and applies COLA from 2012 to this year. (Delayed retirement credits or early retirement reductions are/were applied based on actual age at application. The actual calculation and rounding has a specific sequence outlined on the SSA website.)
Just didn't want folks to think they have to jump through hoops to evaluate what wages are doing. They can only affect their benefits positively by either delaying or continuing to work.
Hadn't read the whole thread before I posted above. So according to Gallina, I don't need to worry about that anymore.
Living in Nevada our house ended up losing half it’s value but now is finally made up the loss. If you just don’t panic and stay in your house and leave your investments alone it will come back. Now if you are unlucky enough to not have HI and get really sick this advice is useless.
If you live long enough for it to matter. If you are 70 and lose your investments how is this supposed to be comforting?
Why would the entire stock market vanish ? Broad based funds are not going to zero...you could actually be down quite a bit and just have what you started with 30 years earlier ..90% of all 119 30 year cycles left you with more than you started with a 60/40 mix
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