Author Topic: An adjustment to what age to collect ss benefits  (Read 890 times)

BTDretire

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An adjustment to what age to collect ss benefits
« on: July 14, 2017, 11:33:46 AM »
The SS inflation adjustment for 2018 will 2.2%.
 I have never seen the inflation adjustment considered when looking at what age to retire.
The usual number is you gain 8% each year you delay, but I think you miss out on the 2.2% inflation raise.
So if you waited out 2017 to retire you didn't get 8% you only got 5.8%.
 Do I see the correctly?

Mr. Green

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Re: An adjustment to what age to collect ss benefits
« Reply #1 on: July 14, 2017, 12:17:02 PM »
The National Average Wage Index, which is what Social Security uses to adjust past earnings for inflation, captures the COLA given to those already collecting retirement benefits. So you do not lose out on those COLA increases by delaying the start of collecting benefits.
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BTDretire

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Re: An adjustment to what age to collect ss benefits
« Reply #2 on: July 14, 2017, 04:50:07 PM »
The National Average Wage Index, which is what Social Security uses to adjust past earnings for inflation,
OK, I went looking for info. The SS website has this,
   * "First, a worker’s previous earnings are restated in terms of today’s wages to reflect wage growth."
 Looking further:
** "(if collecting in 2017) the person's earnings would be indexed to the average wage index for 2015 (48,098.63). Earnings in a year before 2015 would be multiplied by the ratio of 48,098.63 to the average wage index for that year;"
  Increasing that 48,098.63 by 2.2% and then recalculating using the ***"average wage indexing series" does increase the "average wage" used to calcualte the SS earnings.
 So I now see how the inflation adjustment is made for future SS collections.

  Now my question is, does increasing my "average wage" by use of the "average wage indexing series" actually increase my check by the full 2.2% that the person already collecting will get?

*http://www.myretirementpaycheck.org/Social-Security/How-are-benefits-calculated

**https://www.ssa.gov/oact/cola/awifactors.html

***https://www.ssa.gov/oact/cola/awiseries.html

Thanks for the push to get more understanding of this.





MDM

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Re: An adjustment to what age to collect ss benefits
« Reply #3 on: July 14, 2017, 06:57:27 PM »
The AWI and COLA are different.  See Social Security increases--COLA & wage-indexed amounts for a little more detail.

See the SocialSecurity tab in the case study spreadsheet for an "open source" (if you don't mind looking through Excel formulas) look at benefit calculations.

NoNonsenseLandlord

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Re: An adjustment to what age to collect ss benefits
« Reply #4 on: July 15, 2017, 11:30:05 PM »
The 8% is an adjustment for collecting a year less (dying faster).  The 2.2% is for a COLA.  You would get 10.2% more if you wait a year, I think...

Rosy

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Re: An adjustment to what age to collect ss benefits
« Reply #5 on: July 19, 2017, 06:49:53 PM »
The SS inflation adjustment for 2018 will 2.2%.
 I have never seen the inflation adjustment considered when looking at what age to retire.
The usual number is you gain 8% each year you delay, but I think you miss out on the 2.2% inflation raise.
So if you waited out 2017 to retire you didn't get 8% you only got 5.8%.
 Do I see the correctly?

It is the other way around - you get the 8% every time you wait a full year before you collect. The COLA of 2.2% is added - so it is more like 10.2
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