SS 2019 COLA could be close to 3%

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pshonore
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SS 2019 COLA could be close to 3%

Post by pshonore » Fri Aug 10, 2018 7:48 am

The August CPI figures were released today. The 3 month average CPI-W (June July August) is 246.429 . Thats 3.1 % greater then the same period last year and 2.8 % greater than the reference period last year ( Aug Sept Oct) which is used to determine the SS COLA. There are two months to go but the COLA should be close to 3% for 2019 (assuming no big changes in prices for the next two months).

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Fri Aug 10, 2018 12:07 pm

pshonore wrote:
Fri Aug 10, 2018 7:48 am
The August CPI figures were released today. The 3 month average CPI-W (June July August) is 246.429 . Thats 3.1 % greater then the same period last year and 2.8 % greater than the reference period last year ( Aug Sept Oct) which is used to determine the SS COLA. There are two months to go but the COLA should be close to 3% for 2019 (assuming no big changes in prices for the next two months).
I wonder if Medicare Part B charges will go up as well?

hesson11
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Re: SS 2019 COLA could be close to 3%

Post by hesson11 » Fri Aug 10, 2018 12:53 pm

Hmmmm. I wonder what the implications are for someone like me, who is planning to start taking SS benefits this-coming January.

Will my initial monthly benefit reflect this COLA increase? Should I start receiving benefits before the end of this year in hope that the increase would apply to me, thus possibly resulting in higher initial payments? If anyone has a clue, I'd certainly be interested. Or perhaps others in a similar situation would, too. THANKS.

The Wizard
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Re: SS 2019 COLA could be close to 3%

Post by The Wizard » Fri Aug 10, 2018 12:57 pm

dm200 wrote:
Fri Aug 10, 2018 12:07 pm
pshonore wrote:
Fri Aug 10, 2018 7:48 am
The August CPI figures were released today. The 3 month average CPI-W (June July August) is 246.429 . Thats 3.1 % greater then the same period last year and 2.8 % greater than the reference period last year ( Aug Sept Oct) which is used to determine the SS COLA. There are two months to go but the COLA should be close to 3% for 2019 (assuming no big changes in prices for the next two months).
I wonder if Medicare Part B charges will go up as well?
Yes, of course.
I expect my net SS check to decline every year, as it has been starting in 2016.
Now I am in a higher IRMAA tier, so there are basically no limits on what they can do to squash me...
😞
Attempted new signature...

drawpoker
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Re: SS 2019 COLA could be close to 3%

Post by drawpoker » Fri Aug 10, 2018 1:02 pm

Google:
"Last July the Medicare trustees report forecast that 2019 Part B monthly premiums will remain at about $134. After that, they are expected to rise about 5 percent each year through 2026. The Centers for Medicare and Medicaid typically announces the next year's premium amount in November. May 24, 2018"

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Fri Aug 10, 2018 1:12 pm

drawpoker wrote:
Fri Aug 10, 2018 1:02 pm
Google:
"Last July the Medicare trustees report forecast that 2019 Part B monthly premiums will remain at about $134. After that, they are expected to rise about 5 percent each year through 2026. The Centers for Medicare and Medicaid typically announces the next year's premium amount in November. May 24, 2018"
Who knows - I doubt SS retirement will go up 5% for those years..

pshonore
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Re: SS 2019 COLA could be close to 3%

Post by pshonore » Fri Aug 10, 2018 1:59 pm

I imagine some folks are still paying less than $134/month for Part B because of the hold-harmless provision. They won't receive the full COLA because some of will go toward Part B.

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#Cruncher
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Re: SS 2019 COLA could be close to 3%

Post by #Cruncher » Fri Aug 10, 2018 2:04 pm

pshonore wrote:
Fri Aug 10, 2018 7:48 am
The August CPI figures were released today. The 3 month average CPI-W (June July August) is 246.429. Thats 3.1 % greater then the same period last year ...
Actually it was the July CPI released today. And the average of the last three months CPI-W (not seasonally adjusted) is 246.040, not 246.429. However, this is a 3.1% increase over the average of the same three months last year (238.680). So, pshonore, your estimate of a 3% COLA for Social Security in 2019 seems reasonable. Here are the CPI-W (series CWUR0000SA0) for May - September since 2008 selected from the BLS Top Picks CPI-W.

Code: Select all

      ----------------- CPI-W -------------------   ---- Average ---  --- Increase ---  Actual
Year    May     June     July     August   Sept     May-Jul  Jul-Sep  May-Jul  Jul-Sep    COLA
2008  212.788  215.223  216.304  215.247  214.935   214.772  215.495
2009  208.774  210.972  210.526  211.156  211.322   210.091  211.001   (2.18%)  (2.09%)   0.0%
2010  214.124  213.839  213.898  214.205  214.306   213.954  214.136    1.84%    1.49%    0.0%
2011  222.954  222.522  222.686  223.326  223.688   222.721  223.233    4.10%    4.25%    3.6%
2012  226.600  226.036  225.568  227.056  228.184   226.068  226.936    1.50%    1.66%    1.7%
2013  229.399  230.002  230.084  230.359  230.537   229.828  230.327    1.66%    1.49%    1.5%
2014  234.216  234.702  234.525  234.030  234.170   234.481  234.242    2.02%    1.70%    1.7%
2015  232.908  233.804  233.806  233.366  232.661   233.506  233.278   (0.42%)  (0.41%)   0.0%
2016  234.436  235.289  234.771  234.904  235.495   234.832  235.057    0.57%    0.76%    0.3%
2017  238.609  238.813  238.617  239.448  240.939   238.680  239.668    1.64%    1.96%    2.0%
2018  245.770  246.196  246.155                     246.040             3.08%
Over the past nine years the year-over-year increase of the July -September average on which the COLA is based has been fairly close to that of the May-July average. So I'd also guess it will be about 3.0% this year. Note: the far right column shows the actual COLAs. It agrees with the COLA History for 2009-2017. The COLA is rounded to the nearest 1/10 of a percentage point and is never less than 0%. As explained in the 2nd paragraph of the Cost of Living Adjustment
To determine the COLA, the average CPI-W for the third calendar quarter of the most recent year a COLA was determined is compared to the average CPI-W for the third calendar quarter of the current year.
So for example the 0.3% COLA in 2016 equals the increase from 234.242 in 2014 to 235.057 in 2016. Edit: One Ping correctly points out below that this 0.3% COLA wasn't applied to SS benefits until 2017.

SS recipients should not automatically be happy about getting a large COLA, because it results from a large increase in the CPI which reduces the purchasing power of our dollars. Few will be better off in real terms, and because of the way SS is taxed, some of us will be a little worse off. For example assume a couple receives $40,000 in SS in 2018 along with $33,000 of other ordinary income and will take the standard deduction for a couple age 65+. Also assume that the other income will also increase 3% in 2019. In this case the couple's real after tax income will decline about $110. This can be seen from the following three hypothetical tax returns.
  1. Using the 2018 tax brackets, standard deduction, and Social Security thresholds.
  2. With the income, tax brackets, standard deduction, and SS thresholds all increased 3%.
  3. Same as "B" except the SS thresholds -- following current law -- are not increased.
As shown at the bottom of the table below the $70,975 after tax real income for case B (73,104 / 1.03) is the same as for case A. But the real after tax income for case C is $110 less because the SS thresholds are not indexed to inflation.

Code: Select all

                                   Case A    Case B    Case C
Social Security 50% threshhold     32,000    32,960    32,000
Social Security 85% threshhold     44,000    45,320    44,000
Floor: ord income 10% bracket           0         0         0
Floor: ord income 12% bracket      19,050    19,622    19,622
Floor: ord income 22% bracket      77,400    79,722    79,722

Non-SS Ordinary Income             33,000    33,990    33,990
Social Security Benefit            40,000    41,200    41,200
SS Relevant Income                 53,000    54,590    54,590
50% SS taxable                      6,000     6,180     6,000
85% SS taxable                      7,650     7,880     9,002
Total SS taxable                   13,650    14,060    15,002

Code: Select all

                                   Case A    Case B    Case C
Adjusted gross income              46,650    48,050    48,992
Deductions plus Exemptions         26,600    27,398    27,398
Taxable Income                     20,050    20,652    21,594
Taxable: ord income 12% bracket     1,000     1,030     1,972
Taxable: ord income 10% bracket    19,050    19,622    19,622

Tax: ord income 12% bracket           120       124       237
Tax: ord income 10% bracket         1,905     1,962     1,962
Total tax                           2,025     2,086     2,199

After tax                          70,975    73,104    72,991
After tax 2018 dollars                       70,975    70,865
Prepared with the Compare sheet of my Marginal Tax Rates spreadsheet with 3% increases hacked in for tax brackets, standard deduction, and SS thresholds.
Last edited by #Cruncher on Fri Aug 10, 2018 8:57 pm, edited 1 time in total.

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Fri Aug 10, 2018 2:08 pm

pshonore wrote:
Fri Aug 10, 2018 1:59 pm
I imagine some folks are still paying less than $134/month for Part B because of the hold-harmless provision. They won't receive the full COLA because some of will go toward Part B.
Right - but (as best I understand) there are not many left.

drawpoker
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Re: SS 2019 COLA could be close to 3%

Post by drawpoker » Fri Aug 10, 2018 2:22 pm

dm200 wrote:
Fri Aug 10, 2018 2:08 pm
pshonore wrote:
Fri Aug 10, 2018 1:59 pm
I imagine some folks are still paying less than $134/month for Part B because of the hold-harmless provision. They won't receive the full COLA because some of will go toward Part B.
Right - but (as best I understand) there are not many left.
Actually, it is just the opposite. The vast majority of Part B enrollees (70% for 2018) are paying less than $134. For 70% average Part B premium is $130 this year.

https://www.medicareresources.org/faqs/ ... s-in-2017/

Ron
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Re: SS 2019 COLA could be close to 3%

Post by Ron » Fri Aug 10, 2018 2:22 pm

The Wizard wrote:
Fri Aug 10, 2018 12:57 pm
dm200 wrote:
Fri Aug 10, 2018 12:07 pm
pshonore wrote:
Fri Aug 10, 2018 7:48 am
The August CPI figures were released today. The 3 month average CPI-W (June July August) is 246.429 . Thats 3.1 % greater then the same period last year and 2.8 % greater than the reference period last year ( Aug Sept Oct) which is used to determine the SS COLA. There are two months to go but the COLA should be close to 3% for 2019 (assuming no big changes in prices for the next two months).
I wonder if Medicare Part B charges will go up as well?
Yes, of course.
I expect my net SS check to decline every year, as it has been starting in 2016.
Now I am in a higher IRMAA tier, so there are basically no limits on what they can do to squash me...
😞
Ah, the problems of the rich :mrgreen: ...

- Ron

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One Ping
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Re: SS 2019 COLA could be close to 3%

Post by One Ping » Fri Aug 10, 2018 7:46 pm

#Cruncher wrote:
Fri Aug 10, 2018 2:04 pm

Code: Select all

      ----------------- CPI-W -------------------   ---- Average ---  --- Increase ---  Actual
Year    May     June     July     August   Sept     May-Jul  Jul-Sep  May-Jul  Jul-Sep    COLA
2008  212.788  215.223  216.304  215.247  214.935   214.772  215.495
2009  208.774  210.972  210.526  211.156  211.322   210.091  211.001   (2.18%)  (2.09%)   0.0%
2010  214.124  213.839  213.898  214.205  214.306   213.954  214.136    1.84%    1.49%    0.0%
2011  222.954  222.522  222.686  223.326  223.688   222.721  223.233    4.10%    4.25%    3.6%
2012  226.600  226.036  225.568  227.056  228.184   226.068  226.936    1.50%    1.66%    1.7%
2013  229.399  230.002  230.084  230.359  230.537   229.828  230.327    1.66%    1.49%    1.5%
2014  234.216  234.702  234.525  234.030  234.170   234.481  234.242    2.02%    1.70%    1.7%
2015  232.908  233.804  233.806  233.366  232.661   233.506  233.278   (0.42%)  (0.41%)   0.0%
2016  234.436  235.289  234.771  234.904  235.495   234.832  235.057    0.57%    0.76%    0.3%
2017  238.609  238.813  238.617  239.448  240.939   238.680  239.668    1.64%    1.96%    2.0%
2018  245.770  246.196  246.155                     246.040             3.08%
Over the past nine years the year-over-year increase of the July -September average on which the COLA is based has been fairly close to that of the May-July average. So I'd also guess it will be about 3.0% this year. Note: the far right column shows the actual COLAs. It agrees with the COLA History for 2009-2017. The COLA is rounded to the nearest 1/10 of a percentage point and is never less than 0%. As explained in the 2nd paragraph of the Cost of Living Adjustment
To determine the COLA, the average CPI-W for the third calendar quarter of the most recent year a COLA was determined is compared to the average CPI-W for the third calendar quarter of the current year.
So for example the 0.3% COLA in 2017 equals the increase from 234.242 in 2014 to 235.057 in 2016.
Nice work, #Cruncher. One small correction noted above.

One Ping
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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Sat Aug 11, 2018 11:01 am

drawpoker wrote:
Fri Aug 10, 2018 2:22 pm
dm200 wrote:
Fri Aug 10, 2018 2:08 pm
pshonore wrote:
Fri Aug 10, 2018 1:59 pm
I imagine some folks are still paying less than $134/month for Part B because of the hold-harmless provision. They won't receive the full COLA because some of will go toward Part B.
Right - but (as best I understand) there are not many left.
Actually, it is just the opposite. The vast majority of Part B enrollees (70% for 2018) are paying less than $134. For 70% average Part B premium is $130 this year.
https://www.medicareresources.org/faqs/ ... s-in-2017/
OK - interesting to know. I was in the "hold harmless" category - but am already back in the $134.

Beehave
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Re: SS 2019 COLA could be close to 3%

Post by Beehave » Sat Aug 11, 2018 12:07 pm

hesson11 wrote:
Fri Aug 10, 2018 12:53 pm
Hmmmm. I wonder what the implications are for someone like me, who is planning to start taking SS benefits this-coming January.

Will my initial monthly benefit reflect this COLA increase? Should I start receiving benefits before the end of this year in hope that the increase would apply to me, thus possibly resulting in higher initial payments? If anyone has a clue, I'd certainly be interested. Or perhaps others in a similar situation would, too. THANKS.
The monthly payment increases by the COLA amount whether you are taking it or deferring it. There's no reason to grab it earlier than you planned or wanted to, and no reason to delay beyond what you planned or wanted either.

If you are over full retirement age, each month you delay your payment increases by one twelfth of 8% of the FRA month;y payment. The COLA is additive to this.

Example: Suppose your FRA (full retirement age) payment is $2000/month.
Then each month you delay past FRA your payment goes up a fixed $13.33 up to age 70, when the increases stop.
At age 66 (or whatever is FRA) your payment is 2000 "forever" plus COLAs
If you delay 1 month past FRA, your monthly payment will become 2013.33 "forever" plus COLAs.
If you delay 2 months past FRA to start taking your benefit, the monthly payment will become 2026.66 "forever" plus COLAs.

Let's use these numbers to try to estimate impact of COLA.
Suppose you reach FRA in December 2018 and benefit (as above) = $2000 per month.
Suppose there's a 3% COLA effective Jan 1.

The numbers below may be off a little, but the bottom line is something like this with 3% COLA in circumstances above.
If you take in December, you get $2000 in December, and then $2060 from January on.
If you take in Jan you get zero in December and then 2073.33 from January on.
If you take in February you get zero in December, zero in January, and then 2087.06 a month from February on.

Hope this is helpful.

hesson11
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Re: SS 2019 COLA could be close to 3%

Post by hesson11 » Sat Aug 11, 2018 1:46 pm

Beehave wrote:
Sat Aug 11, 2018 12:07 pm
The monthly payment increases by the COLA amount whether you are taking it or deferring it. There's no reason to grab it earlier than you planned or wanted to, and no reason to delay beyond what you planned or wanted either.

If you are over full retirement age, each month you delay your payment increases by one twelfth of 8% of the FRA month;y payment. The COLA is additive to this.

Example: Suppose your FRA (full retirement age) payment is $2000/month.
Then each month you delay past FRA your payment goes up a fixed $13.33 up to age 70, when the increases stop.
At age 66 (or whatever is FRA) your payment is 2000 "forever" plus COLAs
If you delay 1 month past FRA, your monthly payment will become 2013.33 "forever" plus COLAs.
If you delay 2 months past FRA to start taking your benefit, the monthly payment will become 2026.66 "forever" plus COLAs.

Let's use these numbers to try to estimate impact of COLA.
Suppose you reach FRA in December 2018 and benefit (as above) = $2000 per month.
Suppose there's a 3% COLA effective Jan 1.

The numbers below may be off a little, but the bottom line is something like this with 3% COLA in circumstances above.
If you take in December, you get $2000 in December, and then $2060 from January on.
If you take in Jan you get zero in December and then 2073.33 from January on.
If you take in February you get zero in December, zero in January, and then 2087.06 a month from February on.

Hope this is helpful.
EXTREMELY helpful, Beehave. Thank you so much!

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Sat Aug 11, 2018 2:03 pm

Sometimes the "hold harmless" results are strange. My Medicare Part B did not go up one year because of "hold harmless", BUT my wife (5 years younger) paid the full $134 for her first year on Part B - because she just filed for medicare - despite getting less than half of my SS retirement amount.

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Rager1
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Re: SS 2019 COLA could be close to 3%

Post by Rager1 » Sat Aug 11, 2018 4:06 pm

hesson11 wrote:
Fri Aug 10, 2018 12:53 pm
Hmmmm. I wonder what the implications are for someone like me, who is planning to start taking SS benefits this-coming January.

Will my initial monthly benefit reflect this COLA increase? Should I start receiving benefits before the end of this year in hope that the increase would apply to me, thus possibly resulting in higher initial payments? If anyone has a clue, I'd certainly be interested. Or perhaps others in a similar situation would, too. THANKS.
I, too, was eligible for SS in January the year I started collecting. I signed up for SS, received my notice of the benefit payable starting in January, and before I received my first payment, I was notified of an increase. Is this a great country or what?!

Ed

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neurosphere
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Re: SS 2019 COLA could be close to 3%

Post by neurosphere » Sat Aug 11, 2018 10:25 pm

Rager1 wrote:
Sat Aug 11, 2018 4:06 pm
I, too, was eligible for SS in January the year I started collecting. I signed up for SS, received my notice of the benefit payable starting in January, and before I received my first payment, I was notified of an increase. Is this a great country or what?!

Ed
Hi Ed, I don't think you were technically "eligible" for SS in January, at least in the sense that your first benefit you received or chose to receive was not a January benefit, but rather a December benefit.

Everything makes sense if you just understand that the yearly COLAs are initially applied to the DECEMBER benefits, which are payable IN January. I assume when you applied for SS, you applied to receive a December benefit. You were probably told the amount (or you had calculated your amount) prior to the official release of the new COLA. When the COLA was eventually announced, SS notified you of your new/increased December benefit (which is received in January).

And if we wish to be very particular and accurate with our language, the title of this thread is ambiguous. The "2019 COLA" is really a COLA which first applies to the December 2018 benefit, which are received in Jan 2019. Practically speaking, yes, calling it a "2019 COLA" is one way to describe this. But without additional clarification, it can confuse people as to what the actual underlying process and procedure is for applying and paying out COLAs.
hesson11 wrote:
Fri Aug 10, 2018 12:53 pm
Hmmmm. I wonder what the implications are for someone like me, who is planning to start taking SS benefits this-coming January.

Will my initial monthly benefit reflect this COLA increase? Should I start receiving benefits before the end of this year in hope that the increase would apply to me, thus possibly resulting in higher initial payments? If anyone has a clue, I'd certainly be interested. Or perhaps others in a similar situation would, too. THANKS.
Hopefully what I wrote above will help hesson11 answer his/her own question. :D
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

phantom0308
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Re: SS 2019 COLA could be close to 3%

Post by phantom0308 » Sat Aug 11, 2018 10:42 pm

Isn’t the whole point of COLA to track inflation? If it’s doing its job effectively then you shouldn’t be excited by a 3% increase because everything is 3% more expensive (or am I missing something).

Beehave
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Re: SS 2019 COLA could be close to 3%

Post by Beehave » Sat Aug 11, 2018 11:57 pm

hesson11 wrote:
Sat Aug 11, 2018 1:46 pm
Beehave wrote:
Sat Aug 11, 2018 12:07 pm
The monthly payment increases by the COLA amount whether you are taking it or deferring it. There's no reason to grab it earlier than you planned or wanted to, and no reason to delay beyond what you planned or wanted either.

If you are over full retirement age, each month you delay your payment increases by one twelfth of 8% of the FRA month;y payment. The COLA is additive to this.

Example: Suppose your FRA (full retirement age) payment is $2000/month.
Then each month you delay past FRA your payment goes up a fixed $13.33 up to age 70, when the increases stop.
At age 66 (or whatever is FRA) your payment is 2000 "forever" plus COLAs
If you delay 1 month past FRA, your monthly payment will become 2013.33 "forever" plus COLAs.
If you delay 2 months past FRA to start taking your benefit, the monthly payment will become 2026.66 "forever" plus COLAs.

Let's use these numbers to try to estimate impact of COLA.
Suppose you reach FRA in December 2018 and benefit (as above) = $2000 per month.
Suppose there's a 3% COLA effective Jan 1.

The numbers below may be off a little, but the bottom line is something like this with 3% COLA in circumstances above.
If you take in December, you get $2000 in December, and then $2060 from January on.
If you take in Jan you get zero in December and then 2073.33 from January on.
If you take in February you get zero in December, zero in January, and then 2087.06 a month from February on.

Hope this is helpful.
EXTREMELY helpful, Beehave. Thank you so much!
I'm very happy it was useful to you. I would suggest making an appointment to visit with your local Social Security Office specialist. They can give you a printout which makes your benefit estimation month-by-month very clear. Then you can see the exact tradeoffs and benefits for delaying or taking month-by-month to age 70.
It ends up that because the monthly benefit goes up a constant, fixed amount each month, the first few months after FRA are the least costly portion of the delay. In the example above, forgetting COLAs, you may be able to see that waiting December to get the $13.33 "raise" has a cost of the $2000
you are sacrificing in December. The next month, January, if you wait until February to collect, you are giving up 2013.66 to get that same 13.33 amount of raise. Then if you wait until March the amount you give up for the next 13.33 raise is 2026.99. Private message me if this is not clear and you want to understand it and I'll try to explain better. When to take depends on many issues, so each person's case is different. So I am not suggesting that you should take it earlier or later - - just trying to make clear what I figured out after wrestling with the Soc Sec Office printout and then making spreadsheets to try to see totals over time. I was able to take spousal benefits while delaying which made delaying easier than it otherwise would have been. I think those are no longer available but if you are married (or even divorced from someone you were married to for (I believe) at least ten years, then depending on your age and your spouse's maybe there is some strategy that you can use. I found everything difficult to understand because my circumstances were not the cookie cutter cases, so I really needed to wrestle with the then-current rules, so I'm trying to help you out with some of the non-obvious aspects I figured out about the month-by-month increments. But you should definitely do research into spousal claiming strategies in case they are still avalable and may apply to you.

Best wishes.

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Sheepdog
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Re: SS 2019 COLA could be close to 3%

Post by Sheepdog » Sun Aug 12, 2018 12:17 am

dm200 wrote:
Sat Aug 11, 2018 11:01 am


OK - interesting to know. I was in the "hold harmless" category - but am already back in the $134.
Yes, I am in the $134 category now, but my wife is still lower, as she was never a higher earner.
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

Grogs
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Re: SS 2019 COLA could be close to 3%

Post by Grogs » Sun Aug 12, 2018 8:58 am

phantom0308 wrote:
Sat Aug 11, 2018 10:42 pm
Isn’t the whole point of COLA to track inflation? If it’s doing its job effectively then you shouldn’t be excited by a 3% increase because everything is 3% more expensive (or am I missing something).
I don't think you're missing anything. Of course, your personal rate of inflation is probably different than the CPI, but if your personal rate is the same, then it's a wash. Medicare adds another wrinkle, as others have pointed out. For most people though, I think inflation is difficult to judge year-to-year. OTOH, it's easy to see that your benefit increased X%, so they're happy when there is a big COLA and upset when it is small.

hesson11
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Re: SS 2019 COLA could be close to 3%

Post by hesson11 » Sun Aug 12, 2018 9:24 am

Beehave wrote:
Sat Aug 11, 2018 11:57 pm
I'm very happy it was useful to you. I would suggest making an appointment to visit with your local Social Security Office specialist. They can give you a printout which makes your benefit estimation month-by-month very clear. Then you can see the exact tradeoffs and benefits for delaying or taking month-by-month to age 70.
It ends up that because the monthly benefit goes up a constant, fixed amount each month, the first few months after FRA are the least costly portion of the delay. In the example above, forgetting COLAs, you may be able to see that waiting December to get the $13.33 "raise" has a cost of the $2000
you are sacrificing in December. The next month, January, if you wait until February to collect, you are giving up 2013.66 to get that same 13.33 amount of raise. Then if you wait until March the amount you give up for the next 13.33 raise is 2026.99. Private message me if this is not clear and you want to understand it and I'll try to explain better. When to take depends on many issues, so each person's case is different. So I am not suggesting that you should take it earlier or later - - just trying to make clear what I figured out after wrestling with the Soc Sec Office printout and then making spreadsheets to try to see totals over time. I was able to take spousal benefits while delaying which made delaying easier than it otherwise would have been. I think those are no longer available but if you are married (or even divorced from someone you were married to for (I believe) at least ten years, then depending on your age and your spouse's maybe there is some strategy that you can use. I found everything difficult to understand because my circumstances were not the cookie cutter cases, so I really needed to wrestle with the then-current rules, so I'm trying to help you out with some of the non-obvious aspects I figured out about the month-by-month increments. But you should definitely do research into spousal claiming strategies in case they are still avalable and may apply to you.

Best wishes.
Thanks again, Beehave. Very helpful, indeed, and much appreciated. I think I grasp what you've written. My own circumstances are that I will be turning 68 in January and am considering starting to take benefits then. No spouse to consider. I'll put pencil and paper to the considerations you've presented. Thanks again!

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Sun Aug 12, 2018 10:39 am

phantom0308 wrote:
Sat Aug 11, 2018 10:42 pm
Isn’t the whole point of COLA to track inflation? If it’s doing its job effectively then you shouldn’t be excited by a 3% increase because everything is 3% more expensive (or am I missing something).
For some, a great portion of their expenses are fairly stable - such as fixed mortgage or no mortgage (paid off house) and some other expenses may have low yearly increases. In our case, we qualify for real estate tax exemption/deferral.

For others, though, that is not true.

Health/medical expenses are the real "wild card" for a great many on SS retirement.

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Sun Aug 12, 2018 11:03 am

Let me also add that many (perhaps most) of the remaining private employers that still offer defined benefit retirement plans provide fixed payments for life - no inflation increases.

Leesbro63
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Re: SS 2019 COLA could be close to 3%

Post by Leesbro63 » Sun Aug 12, 2018 11:24 am

Sheepdog wrote:
Sun Aug 12, 2018 12:17 am
dm200 wrote:
Sat Aug 11, 2018 11:01 am


OK - interesting to know. I was in the "hold harmless" category - but am already back in the $134.
Yes, I am in the $134 category now, but my wife is still lower, as she was never a higher earner.
So is this higher inflation kinds of back-door good new for wealthier retirees...who would have even higher premiums to subsidize those "held harmless" if inflation had been lower?

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Re: SS 2019 COLA could be close to 3%

Post by Beehave » Sun Aug 12, 2018 1:19 pm

hesson11 wrote:
Sun Aug 12, 2018 9:24 am
Beehave wrote:
Sat Aug 11, 2018 11:57 pm
I'm very happy it was useful to you. I would suggest making an appointment to visit with your local Social Security Office specialist. They can give you a printout which makes your benefit estimation month-by-month very clear. Then you can see the exact tradeoffs and benefits for delaying or taking month-by-month to age 70.
It ends up that because the monthly benefit goes up a constant, fixed amount each month, the first few months after FRA are the least costly portion of the delay. In the example above, forgetting COLAs, you may be able to see that waiting December to get the $13.33 "raise" has a cost of the $2000
you are sacrificing in December. The next month, January, if you wait until February to collect, you are giving up 2013.66 to get that same 13.33 amount of raise. Then if you wait until March the amount you give up for the next 13.33 raise is 2026.99. Private message me if this is not clear and you want to understand it and I'll try to explain better. When to take depends on many issues, so each person's case is different. So I am not suggesting that you should take it earlier or later - - just trying to make clear what I figured out after wrestling with the Soc Sec Office printout and then making spreadsheets to try to see totals over time. I was able to take spousal benefits while delaying which made delaying easier than it otherwise would have been. I think those are no longer available but if you are married (or even divorced from someone you were married to for (I believe) at least ten years, then depending on your age and your spouse's maybe there is some strategy that you can use. I found everything difficult to understand because my circumstances were not the cookie cutter cases, so I really needed to wrestle with the then-current rules, so I'm trying to help you out with some of the non-obvious aspects I figured out about the month-by-month increments. But you should definitely do research into spousal claiming strategies in case they are still avalable and may apply to you.

Best wishes.
Thanks again, Beehave. Very helpful, indeed, and much appreciated. I think I grasp what you've written. My own circumstances are that I will be turning 68 in January and am considering starting to take benefits then. No spouse to consider. I'll put pencil and paper to the considerations you've presented. Thanks again!
Age 68 makes a lot of sense in many ways - - especially in increasing the monthly amount significantly without paying top dollar and without overly limiting delay. Best wishes to you.

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Thu Sep 27, 2018 2:06 pm

Getting closer to the final number for 2019 :)

https://www.benefitspro.com/2018/09/18/ ... 0827150749

wrongfunds
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Re: SS 2019 COLA could be close to 3%

Post by wrongfunds » Thu Sep 27, 2018 8:25 pm

Really? People are complaining about <something> premium going up from $130 to $134 ?

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Re: SS 2019 COLA could be close to 3%

Post by vtMaps » Thu Sep 27, 2018 9:09 pm

Beehave wrote:
Sat Aug 11, 2018 12:07 pm
If you take in December, you get $2000 in December, and then $2060 from January on.
If you take in Jan you get zero in December and then 2073.33 from January on.
If you take in February you get zero in December, zero in January, and then 2087.06 a month from February on.
I think that this is not correct. My understanding is that delayed retirement credits earned in 2019 do not show up in your benefit check until 2020.

--vtMaps
The optimist proclaims that we live in the best of all possible worlds; and the pessimist fears this is true. --James Branch Cabell

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Re: SS 2019 COLA could be close to 3%

Post by Beehave » Thu Sep 27, 2018 10:10 pm

vtMaps wrote:
Thu Sep 27, 2018 9:09 pm
Beehave wrote:
Sat Aug 11, 2018 12:07 pm
If you take in December, you get $2000 in December, and then $2060 from January on.
If you take in Jan you get zero in December and then 2073.33 from January on.
If you take in February you get zero in December, zero in January, and then 2087.06 a month from February on.
I think that this is not correct. My understanding is that delayed retirement credits earned in 2019 do not show up in your benefit check until 2020.

--vtMaps
The benefits of delaying accrue month-by-month. THE best way to understand your benefit is to get the month-by-month printout from Social Security (I do not know if it's available online - - you can get it at the Social Security office). The report is a 1980s-style green screen mainframe-type printout and may not even be possible to receive and print on your PC. It shows month-by-month from the current month through your age 70 (not including future COLAs) what your monthly estimated benefit is. Much advice you read anywhere is based on big misunderstandings of how things actually work. Advice not based on the understanding of how benefits accrue month-by month cannot provide a clear view of the costs and benefits of taking or delaying at any time.

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Re: SS 2019 COLA could be close to 3%

Post by Dale_G » Thu Sep 27, 2018 11:16 pm

Leesbro63 wrote:
Sun Aug 12, 2018 11:24 am
snip ..... So is this higher inflation kinds of back-door good new for wealthier retirees...who would have even higher premiums to subsidize those "held harmless" if inflation had been lower?
Great! We get about another $1,000 in SS before tax - and the buying power of the portfolio goes down by $30,000 per million. That doesn't seem like back-door good news to me. Neglecting taxes, anyone with a portfolio or savings greater than about $33,000 is likely to be a loser.

Dale
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FIREchief
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Re: SS 2019 COLA could be close to 3%

Post by FIREchief » Fri Sep 28, 2018 12:27 am

Dale_G wrote:
Thu Sep 27, 2018 11:16 pm
Neglecting taxes, anyone with a portfolio or savings greater than about $33,000 is likely to be a loser.

Dale
Not if their LMP is 100% TIPS.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: SS 2019 COLA could be close to 3%

Post by vtMaps » Fri Sep 28, 2018 4:31 am

Beehave wrote:
Thu Sep 27, 2018 10:10 pm
The benefits of delaying accrue month-by-month.
<snip>
Advice not based on the understanding of how benefits accrue month-by month cannot provide a clear view of the costs and benefits of taking or delaying at any time.
Yes, the DRC (delayed retirement credits) accrue month-by-month, but your actual monthly benefit check is adjusted only once a year (in January) to reflect the accrual of DRC during the preceding calendar year.

--vtMaps
The optimist proclaims that we live in the best of all possible worlds; and the pessimist fears this is true. --James Branch Cabell

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Re: SS 2019 COLA could be close to 3%

Post by Beehave » Fri Sep 28, 2018 9:44 am

vtMaps wrote:
Fri Sep 28, 2018 4:31 am
Beehave wrote:
Thu Sep 27, 2018 10:10 pm
The benefits of delaying accrue month-by-month.
<snip>
Advice not based on the understanding of how benefits accrue month-by month cannot provide a clear view of the costs and benefits of taking or delaying at any time.
Yes, the DRC (delayed retirement credits) accrue month-by-month, but your actual monthly benefit check is adjusted only once a year (in January) to reflect the accrual of DRC during the preceding calendar year.

--vtMaps
I'm not sure if we're discussing the same thing. The point I'm trying to make is illustrated below.

Delayed credits accrue monthly. If at full retirement your benefit is $2000 per month, each month you delay your benefit goes up by one-twelfth of eight percent, which is $13.33. Ignoring COLAs and just looking at credits, assuming that your full retirement age is 66, and assuming that $2000 is your full retirement benefit, then:
(a) if you claim at age 66 your monthly check will forever (excluding COLAs) be $2000.
(b) if you claim at age 66 and one month your monthly check will forever (excluding COLAs) be $2013.33.
(c) if you claim at age 66 and two months your monthly check will forever (excluding COLAs) be $2026.67.
And so on until age 66 plus 48 months at which time the monthly increases for delaying terminate.
At whatever of these ages you claim, you will get the specific amount based on that month. There is no January accrual or wait-period or anything special about January other than COLAs, which are an issue independent of delayed credits.

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Re: SS 2019 COLA could be close to 3%

Post by The Wizard » Fri Sep 28, 2018 9:56 am

Ok, so has the correct interpretation on when DRCs get applied to your benefit check: vtMaps or Beehave?
And where is sscritic when we need him?
Attempted new signature...

Leesbro63
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Re: SS 2019 COLA could be close to 3%

Post by Leesbro63 » Fri Sep 28, 2018 10:08 am

Dale_G wrote:
Thu Sep 27, 2018 11:16 pm
Leesbro63 wrote:
Sun Aug 12, 2018 11:24 am
snip ..... So is this higher inflation kinds of back-door good new for wealthier retirees...who would have even higher premiums to subsidize those "held harmless" if inflation had been lower?
Great! We get about another $1,000 in SS before tax - and the buying power of the portfolio goes down by $30,000 per million. That doesn't seem like back-door good news to me. Neglecting taxes, anyone with a portfolio or savings greater than about $33,000 is likely to be a loser.

Dale
I think the two things are separate. Inflation is what it is. Some like a little inflation (a few even like a lot of inflation). Many (most?) don't like inflation. But whether we like it or not, very small inflation causes higher earners to pay even more for Medicare. And higher inflation causes higher earners to pay less for Medicare than if very low inflation. The fact that inflation generally hurts financial assets (but not always) is a separate point. My point was just to recognize that for higher earners, many Bogleheads, the Medicare increase will be less than if inflation had been higher.

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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Fri Sep 28, 2018 10:10 am

wrongfunds wrote:
Thu Sep 27, 2018 8:25 pm
Really? People are complaining about <something> premium going up from $130 to $134 ?
The basic Medicare Part B Premium is $134/month - unless income above a certain threshold. When it went up, many SS recipients did not incur the full increase to $134 because of low (or no) SS increases.

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Re: SS 2019 COLA could be close to 3%

Post by wrongfunds » Fri Sep 28, 2018 10:36 am

dm200 wrote:
Fri Sep 28, 2018 10:10 am
wrongfunds wrote:
Thu Sep 27, 2018 8:25 pm
Really? People are complaining about <something> premium going up from $130 to $134 ?
The basic Medicare Part B Premium is $134/month - unless income above a certain threshold. When it went up, many SS recipients did not incur the full increase to $134 because of low (or no) SS increases.
I am still not getting it. What was the premium before it went to $134? Was it $130? Why is that such a big concern?

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dm200
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Re: SS 2019 COLA could be close to 3%

Post by dm200 » Fri Sep 28, 2018 10:49 am

wrongfunds wrote:
Fri Sep 28, 2018 10:36 am
dm200 wrote:
Fri Sep 28, 2018 10:10 am
wrongfunds wrote:
Thu Sep 27, 2018 8:25 pm
Really? People are complaining about <something> premium going up from $130 to $134 ?
The basic Medicare Part B Premium is $134/month - unless income above a certain threshold. When it went up, many SS recipients did not incur the full increase to $134 because of low (or no) SS increases.
I am still not getting it. What was the premium before it went to $134? Was it $130? Why is that such a big concern?
Not for everyone. I think it had been something like $109. My wife, for example, paid $134 because that was the amount when she turned 65 - but others were capped by "hold harmless" when SS did not go up enough to pay the full $134. So, someone might have been at $130 as theirs went up.

I believe it will be $134 in 2019 (under thresshold for income), but then rise about 5% per year for the next 5 or 6 years.

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Re: SS 2019 COLA could be close to 3%

Post by neurosphere » Fri Sep 28, 2018 10:56 am

The Wizard wrote:
Fri Sep 28, 2018 9:56 am
Ok, so has the correct interpretation on when DRCs get applied to your benefit check: vtMaps or Beehave?
And where is sscritic when we need him?
Have not read most of the thread. But...

vtMaps has the most complete/accurate answer.

Delayed credits earned in the current year are not applied until January.

Example, assume 12 months of delayed credits, with the first check received in August. 6 months of delayed credits will be reflected in the Aug-Dec checks. Then, the following January is when the remaining credits will be applied.

Here is the text taken from the explanatory information from https://socialsecurity.tools/
Special Rule

Delayed "credits" are calculated based on the number of months earned in the previous calendar year.

This means that if you begin delayed benefits in a month other than January, your initial benefit will be a little smaller than the full delayed benefit, at first. This difference will disappear beginning in January of the following year, at which point your benefit will increase to the full benefit amount. If you wait until age 70, your delayed credits are applied immediately.
Note that I'm finessing some of the details in my example in order to make the general point. That is, the August check is really for the July benefit, which means that perhaps in my example there are only 5 months of credits in the current year (and 7 in the previous). And also I don't recall if the credits are first applied to the January BENEFIT, or to the January CHECK. I suspect it's the January benefit. But I'm not sure. I know how to look up those answers, but don't have them in my head. :)

But basically, a benefit received in calendar year 1 of $X, will be increased in January of year 2 to $Y = $X +$DC +$COLA. $DC represents delayed credits (if any) earned in the previous year, and $COLA is the COLA, if any, applied for the new calendar year (the COLA starts with the DECEMBER benefit, and is reflected in the January CHECK). As mentioned, I'm not sure if delayed credits get paid in the Jan check. It might be the February check. In the time I have taken to write these disclaimers and cautions, I guess I could have looked up the actual answer. But then I would have prevented others from looking it up on their own and missing out on the fun. ;)
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Re: SS 2019 COLA could be close to 3%

Post by FactualFran » Fri Sep 28, 2018 2:10 pm

wrongfunds wrote:
Fri Sep 28, 2018 10:36 am
I am still not getting it. What was the premium before it went to $134? Was it $130? Why is that such a big concern?
The standard Medicare Part B monthly premium was $121.80 in 2016, prior to being $134 in 2017 and 2018.

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Re: SS 2019 COLA could be close to 3%

Post by wrongfunds » Fri Sep 28, 2018 3:00 pm

Has anybody noticed that today's millennium teenager will be getting $378,943 per year in SS benefits if she earns SS max every year for 35 years of her career? Oh, to be young has its advantages :-)


Ref: https://www.ssa.gov/oact/tr/TR01/lr3B5-m.html

Seriously, am I reading that chart wrong??

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mrc
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Re: SS 2019 COLA could be close to 3%

Post by mrc » Fri Sep 28, 2018 3:04 pm

wrongfunds wrote:
Fri Sep 28, 2018 3:00 pm
Has anybody noticed that today's millennium teenager will be getting $378,943 per year in SS benefits if she earns SS max every year for 35 years of her career? Oh, to be young has its advantages :-)


Ref: https://www.ssa.gov/oact/tr/TR01/lr3B5-m.html

Seriously, am I reading that chart wrong??
Yeah, and gasoline will be $10/gallon and doctor's office copays will be $250 in network. :happy
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Re: SS 2019 COLA could be close to 3%

Post by mptfan » Fri Sep 28, 2018 3:07 pm

wrongfunds wrote:
Fri Sep 28, 2018 3:00 pm
Has anybody noticed that today's millennium teenager will be getting $378,943 per year in SS benefits if she earns SS max every year for 35 years of her career? Oh, to be young has its advantages :-)


Ref: https://www.ssa.gov/oact/tr/TR01/lr3B5-m.html

Seriously, am I reading that chart wrong??
I don't think you are reading it wrong, but that number is in future value dollars as of the year 2067, almost 50 years from now. The value of that benefit in constant 2001 dollars is $42,097. I'm too lazy to figure out what that is in 2018 dollars.

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Re: SS 2019 COLA could be close to 3%

Post by wrongfunds » Fri Sep 28, 2018 3:11 pm

No, that is in "Current dollars ". It says right there on the column heading :-)

The gasoline will be $100,000 per gallon if you can find it then. I suspect it will be banned substance.

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Re: SS 2019 COLA could be close to 3%

Post by mptfan » Fri Sep 28, 2018 4:02 pm

wrongfunds wrote:
Fri Sep 28, 2018 3:11 pm
No, that is in "Current dollars ". It says right there on the column heading :-)
I know you're joking, and I get your point, the heading is misleading.

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Re: SS 2019 COLA could be close to 3%

Post by wrongfunds » Fri Sep 28, 2018 4:32 pm

I'm too lazy to figure out what that is in 2018 dollars.
I came up with the answer of 46315*(42097/26086) = 46315*1.6 = $74,742
The multiplier 1.6 was taken from the ratio of constant 2001 dollars for year 2067 and year 2018

I do not know how to interpret that number at all. What does it mean? I don't have any good intuitive idea as to what that number actually means. Are they saying that the "lazy millennium bum" can buy 1.6x goods with her social security benefits than the "nice geezer" who retires in 2018?

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Re: SS 2019 COLA could be close to 3%

Post by neurosphere » Fri Sep 28, 2018 5:31 pm

The Wizard wrote:
Fri Sep 28, 2018 9:56 am
And where is sscritic when we need him?
Ask and ye shall receive. Although, I kinda sort answered the question, but sscritic did the work to find the horse's mouth, so to speak:
[Some people] doesn’t understand the difference between the words accrue and pay.

(c) When is the increase because of delayed retirement credits effective?—

(1) Credits earned after entitlement and before the year of attainment of age 70. If you are entitled to benefits, we examine our records after the end of each calendar year to determine whether you have earned delayed retirement credits during the previous year for months when you were at or over full retirement age and you were fully insured and eligible for benefits but did not receive them. Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned.

(2) Credits earned after entitlement in the year of attainment of age 70. If you are entitled to benefits in the month you attain age 70, we examine our records to determine if you earned any additional delayed retirement credits during the calendar year in which you attained age 70. Any increase in your benefit amount is effective beginning with the month you attained age 70.

(3) Credits earned prior to entitlement. If you are full retirement age or older and eligible for old-age benefits but do not apply for benefits, your delayed retirement credits for months from the month of attainment of full retirement age through the end of the year prior to the year of filing will be included in the computation of your initial benefit amount. Credits earned in the year you attain age 70 will be added in the month you attain age 70.

https://www.ssa.gov/OP_Home/cfr20/404/404-0313.htm

P.S. [poster X] also is not that clear. An increase in your January benefit is paid in February.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

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neurosphere
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Re: SS 2019 COLA could be close to 3%

Post by neurosphere » Sat Sep 29, 2018 10:56 am

wrongfunds wrote:
Fri Sep 28, 2018 4:32 pm
I'm too lazy to figure out what that is in 2018 dollars.
I came up with the answer of 46315*(42097/26086) = 46315*1.6 = $74,742
The multiplier 1.6 was taken from the ratio of constant 2001 dollars for year 2067 and year 2018

I do not know how to interpret that number at all. What does it mean? I don't have any good intuitive idea as to what that number actually means. Are they saying that the "lazy millennium bum" can buy 1.6x goods with her social security benefits than the "nice geezer" who retires in 2018?
The benefit is based on wages. SS predicts wages will grow faster than inflation. Thus, the benefit will increase faster than inflation. But also note that the amount of money paid into SS for each individual will also increase relative to inflation, due to personal wages and also due to increases in the maximum SS tax as the benefit and contribution base increases.

See this post for an "real world" example which takes into account the trustee assumptions where wages grow faster than CPI, vs when they grow at the same rate:

viewtopic.php?f=2&t=231913&p=4141263#p4141263
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

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