Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

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TheTimeLord
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by TheTimeLord »

Sorry if this was already mentioned but from what I have heard wages are up this year because of pandemic benefits and the fact that lower wage workers were disproportionately affected. Any chance this actually turns to a positive for retirees born in 1960?
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Tamales
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by Tamales »

It might be useful if the moderators added a note to neurosphere's first post in this thread, something like:

The official AWI number for those born in 1960 that is the core topic of this thread will not be known until Q4 of 2021. It will be included in this history table: https://www.ssa.gov/OACT/COLA/awiseries.html once available, with the relevant factor being how far below the 2019 number it is (assuming it will be lower).
Note (from the linked table) that 2009 was the only previous year where the AWI decreased year-over-year so far since 1951. Those born in 1961 will have to wait to assess the impact until the Q4-2022 AWI release; 1962 in Q4-2023, etc.

(unless I got something wrong in the above, in which case I'm sure someone will correct it)
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FIREchief
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by FIREchief »

Juice3 wrote: Tue Dec 01, 2020 5:23 pm What is the purpose of this thread.
For those who were born in 1960, this thread is likely one of the most valuable on the forum right now. 8-)
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retire2022
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by retire2022 »

FIREchief wrote: Sat Dec 05, 2020 1:44 pm
Juice3 wrote: Tue Dec 01, 2020 5:23 pm What is the purpose of this thread.
For those who were born in 1960, this thread is likely one of the most valuable on the forum right now. 8-)
Not for me, I'm up 2.14 million as of yesterday and am born in 1960, I won't need Social Security if ever until 67 or 70, by then it may have run out of money.
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TheTimeLord
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by TheTimeLord »

retire2022 wrote: Sat Dec 05, 2020 1:52 pm
FIREchief wrote: Sat Dec 05, 2020 1:44 pm
Juice3 wrote: Tue Dec 01, 2020 5:23 pm What is the purpose of this thread.
For those who were born in 1960, this thread is likely one of the most valuable on the forum right now. 8-)
Not for me, I'm up 2.14 million as of yesterday and am born in 1960, I won't need Social Security if ever until 67 or 70, by then it may have run out of money.
"Up" or "Up to"?
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by retire2022 »

TheTimeLord wrote: Sat Dec 05, 2020 1:54 pm
retire2022 wrote: Sat Dec 05, 2020 1:52 pm
Not for me, I'm up 2.14 million as of yesterday and am born in 1960, I won't need Social Security if ever until 67 or 70, by then it may have run out of money.
"Up" or "Up to"?
Up to 2.14 million portfolio, my cost basis is approximately 600K.
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TheTimeLord
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by TheTimeLord »

retire2022 wrote: Sat Dec 05, 2020 1:56 pm
TheTimeLord wrote: Sat Dec 05, 2020 1:54 pm
retire2022 wrote: Sat Dec 05, 2020 1:52 pm
Not for me, I'm up 2.14 million as of yesterday and am born in 1960, I won't need Social Security if ever until 67 or 70, by then it may have run out of money.
"Up" or "Up to"?
Up to 2.14 million portfolio, my cost basis is approximately 600K.
"Up" was more exciting, then I could have followed with the question over what time period. And if you answered this year then we would have had something. Congrats on your accomplishment.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by retire2022 »

TheTimeLord wrote: Sat Dec 05, 2020 1:58 pm
"Up" was more exciting, then I could have followed with the question over what time period. And if you answered this year then we would have had something. Congrats on your accomplishment.
It was a 32 year marathon, thank you. I started before Bogleheads, went through five market crashes, every time recovered and made more than before.

While I agree that Covid has impacted our economy. I would like to state Social Security needs assistance, and should be fixed for those less fortunate than myself.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by Eagle33 »

TheTimeLord wrote: Sat Dec 05, 2020 12:10 pm Sorry if this was already mentioned but from what I have heard wages are up this year because of pandemic benefits and the fact that lower wage workers were disproportionately affected. Any chance this actually turns to a positive for retirees born in 1960?
As I understand it, one does not pay payroll taxes on unemployment insurance payments - just applicable income taxes.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by neurosphere »

Eagle33 wrote: Sat Dec 05, 2020 10:46 pm
TheTimeLord wrote: Sat Dec 05, 2020 12:10 pm Sorry if this was already mentioned but from what I have heard wages are up this year because of pandemic benefits and the fact that lower wage workers were disproportionately affected. Any chance this actually turns to a positive for retirees born in 1960?
As I understand it, one does not pay payroll taxes on unemployment insurance payments - just applicable income taxes.
Correct. The wage index is determined entirely by total W2 reportable wages for all individuals, divided by number of individuals with a W2 during the calendar year. So unemployment benefits do not count. But if an employer received stimulus funds (e.g. via PPP) and used that to hire and/or maintain/increase wages per individual, then yes, that would serve to increase the average wage index.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by Juice3 »

FIREchief wrote: Sat Dec 05, 2020 1:44 pm
Juice3 wrote: Tue Dec 01, 2020 5:23 pm What is the purpose of this thread.
For those who were born in 1960, this thread is likely one of the most valuable on the forum right now. 8-)
I respectfully disagree. The numbers are the numbers. Worrying about something you have no control over not a good way to live your life.

What is valuable to those born in 1960 and all of us, is having flexibility to deal with as much change as possible, especially change that can be anticipated.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by Juice3 »

neurosphere wrote: Sat Dec 05, 2020 12:04 pm
Juice3 wrote: Tue Dec 01, 2020 5:23 pm What is the purpose of this thread. This discussion of AWI does not meet the definition of a risk. Risks include an element of control. The year you were born is not controllable. The AWI60 is not controllable.

This entire discussion boils down to your PIA is somewhat variable based on AWI until you turn 60.
Exactly (the bold part). And given what we already know, the AWI is likely to be significantly reduced in 2020, and thus any previous estimates used to make decisions about working, budget, when to take SS, etc can now be updated, even if the actual number is not known. It's information that could be very useful to some people. E.g. given that future SS benefits will likely be reduced for anyone 60 or close to, one might consider waiting a little longer to resign from their job, or commit to a new purchase (home, vacation home, car, whatever) because previously reasonable estimates for SS income are now no longer reasonable.
You have provide no evidence that 2020 is likely to more variable than any other year, thus there is no change in a reasonable persons definition of reasonable.

If you happen to be a gambler that was counting an unexpectedly good outcome or cutting is super close, then you might have an issue to address.

The most common statement on this forum seems to be don't count or count on a reduced SS. This is significantly larger planning assumption than change expected in AWI.

No update can be made in the planning assumption based on what we know now. Is there some way to estimate the updated AWI? Is anyone's planning so tight, that typical variation in AWI changes assumptions?
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neurosphere
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by neurosphere »

Juice3 wrote: Wed Dec 09, 2020 12:55 pm You have provide no evidence that 2020 is likely to more variable than any other year, thus there is no change in a reasonable persons definition of reasonable....

No update can be made in the planning assumption based on what we know now. Is there some way to estimate the updated AWI? Is anyone's planning so tight, that typical variation in AWI changes assumptions?
I'm not sure those criteria you list are a necessary prerequisite for having a discussion on bogleheads. :D I find this discussion educational and informative regardless of any possibility for making active changes to planning decisions. I've leaned a lot about how SS benefits are calculated, how and when the SS Trustees make their annual estimates (March-ish), how benefits are calculated in general, the formula used to calculate the NAWI, etc.

I don't think it's that unreasonable to have discussions about economic uncertainty during recessions and other stressors (internet bubble, housing crisis, covid). The difference with covid is perhaps the unemployment numbers and lost wages appear to be more dramatic than other years, and more concentrated in one calendar year. I think the chances that the SS Trustees Intermediate estimates that were set in March 2020 will over-estimate the NAWI are quite high, more so that in previous years. That's my gut feeling based on what I know about how things work. No harm in discussing it. We discuss risk all the time. In March 2020 there were lots of discussion about the how the then bear market might affect one's retirement planned for (for example) Dec 2020. And yet, no one knew and no one could predict where the market might be on Dec 31st 2020. People still like to talk about it. :wink:

In any case, you're point is clear and understood, and people can use whatever information/discussion in this thread (as always) how they see fit. Many people including myself are making the general point that it's possible that the NAWI will be much less than expected. I guess that's similar to discussions about whether small cap value will outperform the rest of the market, or that the low p/e of international stocks suggests outperformance over domestic. We'll have our answer about the NAWI in less than a year. :beer
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by ObliviousInvestor »

As far as data about how much wages have/haven't fallen this year, table 2.6 here may be of interest:
https://apps.bea.gov/iTable/iTable.cfm? ... 921=survey

Without having looked into the definitions they're using, perhaps lines 3 and 9 are relevant.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by Spirit Rider »

neurosphere wrote: Wed Dec 09, 2020 1:31 pm I'm not sure those criteria you list are a necessary prerequisite for having a discussion on bogleheads. :D I find this discussion educational and informative regardless of any possibility for making active changes to planning decisions. I've leaned a lot about how SS benefits are calculated, how and when the SS Trustees make their annual estimates (March-ish), how benefits are calculated in general, the formula used to calculate the NAWI, etc.
+1

A primary purpose of Bogleheads is information. Just because you do not have control over something does not mean it isn't very informational and critically actionable.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by FIREchief »

Juice3 wrote: Wed Dec 09, 2020 12:47 pm
FIREchief wrote: Sat Dec 05, 2020 1:44 pm
Juice3 wrote: Tue Dec 01, 2020 5:23 pm What is the purpose of this thread.
For those who were born in 1960, this thread is likely one of the most valuable on the forum right now. 8-)
I respectfully disagree. The numbers are the numbers. Worrying about something you have no control over not a good way to live your life.

What is valuable to those born in 1960 and all of us, is having flexibility to deal with as much change as possible, especially change that can be anticipated.
Who said anything about "worrying?" You seem to be reading things into my comment that simply aren't there. Many of us have robust long term financial plans for which expected SS is a meaningful input. As an example, if my expected SS drops, than I may need to spend more of my RMD, which can affect intermediate plans for Roth conversions, gifting, etc.
Last edited by FIREchief on Wed Dec 09, 2020 3:40 pm, edited 1 time in total.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by FIREchief »

ObliviousInvestor wrote: Wed Dec 09, 2020 2:07 pm As far as data about how much wages have/haven't fallen this year, table 2.6 here may be of interest:
https://apps.bea.gov/iTable/iTable.cfm? ... 921=survey

Without having looked into the definitions they're using, perhaps lines 3 and 9 are relevant.
Thanks! Using line 3, I'm calculating that total average monthly wages through October 2020 are approximately 0.3% higher than 2019. Is that what you're seeing? That said, I don't know if we know exactly how SS incorporates the number of workers into that. With record employment levels through Feb, if they just use the total number of people receiving W2's in 2020, the divisor would likely be somewhat larger for 2020 than 2019, thus reducing "average wages per person who received a W2." Does that make sense? :confused
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by retiringwhen »

FIREchief wrote: Wed Dec 09, 2020 3:39 pm Thanks! Using line 3, I'm calculating that total average monthly wages through October 2020 are approximately 0.3% higher than 2019. Is that what you're seeing? That said, I don't know if we know exactly how SS incorporates the number of workers into that. With record employment levels through Feb, if they just use the total number of people receiving W2's in 2020, the divisor would likely be somewhat larger for 2020 than 2019, thus reducing "average wages per person who received a W2." Does that make sense? :confused
That makes sense and is likely the main reason people believe that 2020 will have a reduced AWI.
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by Juice3 »

FIREchief wrote: Wed Dec 09, 2020 3:24 pm Who said anything about "worrying?" You seem to be reading things into my comment that simply aren't there. Many of us have robust long term financial plans for which expected SS is a meaningful input. As an example, if my expected SS drops, than I may need to spend more of my RMD, which can affect intermediate plans for Roth conversions, gifting, etc.
Sure I believe you. Who are you trying to convince?

Why don't you share with us what percentage of your "income" you are assuming SS provides for you and what tolerance and flexibilities your plan provides?
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by FIREchief »

Juice3 wrote: Wed Dec 09, 2020 7:59 pm
FIREchief wrote: Wed Dec 09, 2020 3:24 pm Who said anything about "worrying?" You seem to be reading things into my comment that simply aren't there. Many of us have robust long term financial plans for which expected SS is a meaningful input. As an example, if my expected SS drops, than I may need to spend more of my RMD, which can affect intermediate plans for Roth conversions, gifting, etc.
Sure I believe you. Who are you trying to convince?

Why don't you share with us what percentage of your "income" you are assuming SS provides for you and what tolerance and flexibilities your plan provides?
LOL!! You need to relax dude. :P

Why on earth would I share such personal financial info on the internet?? :confused
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by smitcat »

FIREchief wrote: Wed Dec 09, 2020 9:36 pm
Juice3 wrote: Wed Dec 09, 2020 7:59 pm
FIREchief wrote: Wed Dec 09, 2020 3:24 pm Who said anything about "worrying?" You seem to be reading things into my comment that simply aren't there. Many of us have robust long term financial plans for which expected SS is a meaningful input. As an example, if my expected SS drops, than I may need to spend more of my RMD, which can affect intermediate plans for Roth conversions, gifting, etc.
Sure I believe you. Who are you trying to convince?

Why don't you share with us what percentage of your "income" you are assuming SS provides for you and what tolerance and flexibilities your plan provides?
LOL!! You need to relax dude. :P

Why on earth would I share such personal financial info on the internet?? :confused
Exactly this applies to us as well...
"Many of us have robust long term financial plans for which expected SS is a meaningful input. As an example, if my expected SS drops, than I may need to spend more of my RMD, which can affect intermediate plans for Roth conversions, gifting, etc."

And certainly this one also...
"Why on earth would I share such personal financial info on the internet??"
CrossOverGuy
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by CrossOverGuy »

Curious if the figures have changed. One video I saw linked to figures where there indicates there might now have been an increase for 2020.

https://taxtracking.com/national-averag ... ex-in-2020
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Re: Graph of how SS benefits can change with decreases in 2020 national wages for one born in 1960

Post by maywood »

Thanks for the link, that sounds hopeful.

I'll check in mid October, I believe the AWI figure for 2020 will be posted here.
When it is, I'll post on this thread.

https://www.ssa.gov/OACT/COLA/awiseries.html

maywood
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