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Social Security C.O.L.A. for 2025 at 2.5% increase/ADDED calculations
While the COLA increase has averaged about 2.6% over the last decade, the COLA was 3.2% in 2024 and jumped to as high as 8.7% in 2023 and 5.9% in 2022.
It’s complicated. Older citizens spend more for health care. That’s been rising faster than the average rate of inflation ISTM. Is this offset by the fact many own their own homes? Or that they don’t have work related expenses (like driving to work)? Like I said - It’s complicated. But I’m afraid for many in the “Over 65” camp, 2.5% isn’t going to help them much, and won’t keep them even with cost of living.
Not worried about those who frequent the board. We are atypical. It’s the ones who haven’t planned well in advance and have little grasp of financial issues I worry about.
Fiat, bogus "sadistics" used as the measure by which the amount of the COLA gets decided. Imaginary reality on the part of the gummint. "Lies, damned lies, and statistics."
I’m not complaining about the COLA increase. There is no perfect measure of inflation, and something is better than nothing. My state pension has no inflation adjustments, and the real value of our payments has dropped considerably since retiring. Republicans control our legislature and they have no sympathy for retired employees.
Fiat, bogus "sadistics" used as the measure by which the amount of the COLA gets decided. Imaginary reality on the part of the gummint. "Lies, damned lies, and statistics."
You don't know what you're talking about, and the evidentiary background for the various CPI and related calcs has been posted here more than once.
Fiat, bogus "sadistics" used as the measure by which the amount of the COLA gets decided. Imaginary reality on the part of the gummint. "Lies, damned lies, and statistics."
You don't know what you're talking about, and the evidentiary background for the various CPI and related calcs has been posted here more than once.
Yes, David. I love you, too. Marry me. Take me, hard.
The source link for these rough calculations is below. If anyone has another method of calculation; please let us know. The calculator uses a standard CPI government number. Whether you agree or not; this is the method used for various COLA's to the best of my knowledge. Having a COLA for a pension or SS is valuable. For those fortunate enough to have a pension, let alone a COLA; you should be 'happy'. I'll use 10 years looking back, to present, as a sample; with $1,000 as a base number. YES, there numerous types of CPI; including formulas that do not use government methods.
IF one had SS or a pension paying $1,000/month in 2014, then the following numbers seem to apply: --- Pension, no COLA: One still has a $1,000 monthly payment, but the 'purchasing power is NOW $670 from 10 years ago . --- Pension w/COLA: One's monthly payment may now be in the range of $1,332.
*** A very large gap in those two numbers in 2024, eh?
Annual in 2024: Pension w/o COLA = $8,040 Pension w/COLA = $15,984
Compounding operates in two directions !!!
HEY, I/we need to know if there is a large mistake with this math.
The SSA COLA uses CPI-W, not the common CPI (really, CPI-U). The SSA even publishes quarterly averages for CPI-W and Q3 averages are used in COLA calculations. So, 2014/Q3 234.242 2014/Q3 308.729
10-yr ratio 1.3179916
So, 1,000/mo in 2014 will become 1,317.99/mo (to be paid from January 2025). That is close to $1,332/mo from the common CPI calculator.
No COLA ($1000/M *12) = $12K in 2014 is still $12K in 2024
With COLA ($1000/M *12) = $12K in 2014 adjusts to $15,984 in 2024
I think you adjusted the non-COLA pension ($670*12) to get $8040 which is the buying power, not the actual 2024 pension payment of $12K.
Remember, with the COLA adjusted pension of $15,984, you would maintain the buying power of $12K while the non-COLA loses to inflation every year.
In other words, in 2024:
A COLA adjusted pension maintains its 2014 buying power of $12K ($15,984 in today's dollars), while a non-COLA adjusted Pension lost 33.2% of its buying power making ($12K in today's dollars) "worth" only $8040.
Maybe @msf could check my math and simplify further
Thank you @yogibearbull I did look at a B.O.L. data list and could have done the math from that, but I used the real easy method with the calculator, knowing the numbers would be close enough for illustration.
Hi @bee Thank you. Perhaps my wording is not the best today for the numbers listed. Yes, one would still receive the $1,000/month today as was in 2014; but the purchasing power in 2024 is greatly reduced. We both agree and understand my elementary illustration and how inflation BITES into monies not protected with a COLA or investments.
”But the index tracks a range of goods and services that are purchased primarily by younger working people, not by retirees, who often spend more of their income on housing and health care. The costs experienced by Americans over age 62 tend to outpace the index, Ms. Ghilarducci said, making the annual adjustment fall short of what retirees actually need.
“The adjustment is often mostly eaten up by the increase in Medicare Part B premiums, which are automatically deducted from Social Security checks. Some experts, including Ms. Ghilarducci, say Social Security beneficiaries also need an increase in their base-line benefits to maintain their buying power.”
What becomes clear with the medical issue is if you live long enough costs increase at a faster and faster rate.
This is an example of an economic concept called Baumol’s cost disease. "It explains why barbers make more in San Francisco than in Cleveland and why services such as health care and education keep getting more expensive. "
In a nutshell, as technology increases productivity in some areas like manufacturing, they become cheaper relative to labor-intensive areas like education where productivity can't rise much. Consider too how few farmers we have today producing more than ever.
I do remember paying for college tuition with a part time job back in the 1980's... now college tuition equates to taking out a mortgage.
I'd argue that "food away from home" has had a higher increase than the chart suggest.
A Happy Meal is still a cheap option, but a Happy Hour out at a restaurant has lost its Happy. A bottle of middle tier beer at home which you refrigerate and remove cap = $1-$1.50. The HH price for those 2 services 400% - 500% higher.
Truck (say a F150) prices are also much higher today on a percentage basis compared to 1980 prices.
The former taxi drivers have already been displaced by the Uber drivers....now despite how quote fantastic end quote the economy is doing there is an over abundance of Uber drivers and they are making way less than they did several years ago....not sure what musk has to do with this... economies and civilization moves forward sometimes at a rapid pace....what happened to the buggy whip manufacturers? The cleaners, no one wears a pressed shirt anymore....How about the phone operators? While it's easy to say if you're in a good spot, one needs to grow and adapt....or else get left behind.
Remember when a few years ago they were telling the blue collar types to learn to code? Now the blue collar types are telling the unemployed coders to learn to weld
Several driverless systems using multiple inputs (optical, laser, ultrasound) have been approved, but not yet the Tesla's optical-only system. Musk bet big on optical-only system with huge AI supporting it, but AI cannot fix what the optical system cannot see, especially in bad weather or night.
BaseballFan said - ”The cleaners, no one wears a pressed shirt anymore.... “
There are some better quality shirts that look nice without pressing. And most jeans don’t require pressing.
I’ve cut back on trips to ”the cleaners” from a dozen times a year to only 3 or 4 because I found that every time I went lately I was the one being “taken to the cleaners”.
The former taxi drivers have already been displaced by the Uber drivers....now despite how quote fantastic end quote the economy is doing there is an over abundance of Uber drivers and they are making way less than they did several years ago....
Talking about taxi drivers, I finally found a worse investment that mine. The value of a taxi medallion in NYC runs in the area of $110,000 - $130,000. In 2011, they were selling for $1,000,000 or more.
Comments
https://blog.ssa.gov/social-security-announces-2-5-percent-benefit-increase-for-2025/
The payroll tax cap is based on the national average wage index.
https://www.ssa.gov/oact/cola/AWI.html
Not worried about those who frequent the board. We are atypical. It’s the ones who haven’t planned well in advance and have little grasp of financial issues I worry about.
I'll use 10 years looking back, to present, as a sample; with $1,000 as a base number.
YES, there numerous types of CPI; including formulas that do not use government methods.
IF one had SS or a pension paying $1,000/month in 2014, then the following numbers seem to apply:
--- Pension, no COLA: One still has a $1,000 monthly payment, but the 'purchasing power is NOW $670 from 10 years ago .
--- Pension w/COLA: One's monthly payment may now be in the range of $1,332.
*** A very large gap in those two numbers in 2024, eh?
Annual in 2024:
Pension w/o COLA = $8,040
Pension w/COLA = $15,984
Compounding operates in two directions !!!
HEY, I/we need to know if there is a large mistake with this math.
Calculator source
So,
2014/Q3 234.242
2014/Q3 308.729
10-yr ratio 1.3179916
So, 1,000/mo in 2014 will become 1,317.99/mo (to be paid from January 2025). That is close to $1,332/mo from the common CPI calculator.
https://www.ssa.gov/oact/STATS/avgcpi.html
Timeframe
2014 - 2024
No COLA
($1000/M *12) = $12K in 2014 is still $12K in 2024
With COLA
($1000/M *12) = $12K in 2014 adjusts to $15,984 in 2024
I think you adjusted the non-COLA pension ($670*12) to get $8040 which is the buying power, not the actual 2024 pension payment of $12K.
Remember, with the COLA adjusted pension of $15,984, you would maintain the buying power of $12K while the non-COLA loses to inflation every year.
In other words, in 2024:
A COLA adjusted pension maintains its 2014 buying power of $12K ($15,984 in today's dollars), while a non-COLA adjusted Pension lost 33.2% of its buying power making ($12K in today's dollars) "worth" only $8040.
Maybe @msf could check my math and simplify further
Perhaps my wording is not the best today for the numbers listed. Yes, one would still receive the $1,000/month today as was in 2014; but the purchasing power in 2024 is greatly reduced.
We both agree and understand my elementary illustration and how inflation BITES into monies not protected with a COLA or investments.
https://www.nytimes.com/2024/10/10/business/social-security-benefits-increase-2025.html
Eyeballing (mentally multiplying $12K by yogi's 1.3+x to get approximately $15.6K+), things look about right.
It's been a looong time since I graded math papers. I'm not restarting now
”But the index tracks a range of goods and services that are purchased primarily by younger working people, not by retirees, who often spend more of their income on housing and health care. The costs experienced by Americans over age 62 tend to outpace the index, Ms. Ghilarducci said, making the annual adjustment fall short of what retirees actually need.
“The adjustment is often mostly eaten up by the increase in Medicare Part B premiums, which are automatically deducted from Social Security checks. Some experts, including Ms. Ghilarducci, say Social Security beneficiaries also need an increase in their base-line benefits to maintain their buying power.”
What becomes clear with the medical issue is if you live long enough costs increase at a faster and faster rate.
dhttps://www.vox.com/new-money/2017/5/4/15547364/baumol-cost-disease-explained
In a nutshell, as technology increases productivity in some areas like manufacturing, they become cheaper relative to labor-intensive areas like education where productivity can't rise much. Consider too how few farmers we have today producing more than ever.
From the cited piece:
Interesting Chart.
I do remember paying for college tuition with a part time job back in the 1980's... now college tuition equates to taking out a mortgage.
I'd argue that "food away from home" has had a higher increase than the chart suggest.
A Happy Meal is still a cheap option, but a Happy Hour out at a restaurant has lost its Happy. A bottle of middle tier beer at home which you refrigerate and remove cap = $1-$1.50. The HH price for those 2 services 400% - 500% higher.
Truck (say a F150) prices are also much higher today on a percentage basis compared to 1980 prices.
Don't get me started on the price of Legos.
Next question - What will the former taxi drivers eat?
Remember when a few years ago they were telling the blue collar types to learn to code? Now the blue collar types are telling the unemployed coders to learn to weld
What goes around comes around...
There are some better quality shirts that look nice without pressing. And most jeans don’t require pressing.
I’ve cut back on trips to ”the cleaners” from a dozen times a year to only 3 or 4 because I found that every time I went lately I was the one being “taken to the cleaners”.
A good system after all, and a (partial) triumph for socialist democracy.