social security PIA increases before and after retirement

[mistymoney]

Trying to figure out how this works. 2 questions:

#1 - So they are estimating that the ss increase will be 3.2% this year. That is for currently collecting recipients. What about those of us still accuring?

Are the bendpoints adjusted up by 3.2 percent, historical wages adjusted up 3.2%, or both? or is neither at 3.2%? if not, how are those adjusted, what number is used?

#2 - Sadly, I am over 35 years into the system! Sadly, even inflation adjusted, 12 of those years are under 20k! So let's say in my top 35 years I am replacing a lowest earning year of 25k (inflation adjusted) with a 125k year. How would I estimate the change in the monthly PIA?

I was thinking I could take the delta of 100k for the new salary, divide by 35*12 for how much to add on the the average monthly wage (without having to completely replicate the soc sec calculations of all historical salary and inflation adj, etc.

so would be 100k/(35*12) = $238 increase on average monthly and then *15% for what will be included in soc sec, so replacing a 25k year with 125k year would mean an increase of $35 and change for the PIA.

Am I on the right track?

[secondcor521]

The 3.2% number you're quoting is, I'm fairly certain, the estimated 2025 COLA for current recipients.  That is based on some form of CPI, I forget which specific one.

Bendpoints are adjusted upwards by average wage growth, which is a different number.  Your historical wages are adjusted by this same wage growth number.

Regarding your second question, I would recommend using the http://ssa.tools website.  Copy and paste your earnings record, then you can change the information (either by putting your earnings history into Excel and modifying it there, or by using the slider controls at the top of http://ssa.tools regarding future earnings) and see the effect on your PIA and benefit amount.

My earnings record is 39 years long and 14 of those are inflation adjusted under $20K.  I did a sample test on my earnings record, and if I worked another year at $125K it increased my PIA by $43 per month, so I think you're in the ballpark.  Bottom line, once you're past the second bend point and are in that 15% range, it really doesn't move the needle very much.

[mistymoney]

The 3.2% number you're quoting is, I'm fairly certain, the estimated 2025 COLA for current recipients.  That is based on some form of CPI, I forget which specific one.

Bendpoints are adjusted upwards by average wage growth, which is a different number.  Your historical wages are adjusted by this same wage growth number.

oh! thanks!

Regarding your second question, I would recommend using the http://ssa.tools website.  Copy and paste your earnings record, then you can change the information (either by putting your earnings history into Excel and modifying it there, or by using the slider controls at the top of http://ssa.tools regarding future earnings) and see the effect on your PIA and benefit amount.

Thanks! this tool works great!

My earnings record is 39 years long and 14 of those are inflation adjusted under $20K.  I did a sample test on my earnings record, and if I worked another year at $125K it increased my PIA by $43 per month, so I think you're in the ballpark.  Bottom line, once you're past the second bend point and are in that 15% range, it really doesn't move the needle very much.

appreciate this double check! on the ssatools site, the projection was similar to my bootleg one. I had no idea that an online calculator could be so easy and accurate. with no future earnings, match exactly with what ss site told me.