Why did my monthly benefit estimate for when I retire in three years increase from 2023 to 2024?

[WilliamS620760]

Greetings. I am retired but not yet collecting social security, which I plan to do when I turn 67 in about 4 years. I use some retirement planning models which have you look up you projected benefit amount at age 67 and put them in the model. In 2023, this amount was approximately $3500 on the My Social Security website. I logged on to the site a few days ago and this number is now about $3650 per month. I know there is a COLA for when you are actually collecting social security but I was not expected my project amount to go up. This might not seem like a big different but over more than 20 years it is significant and if this happens again the next three years before I start taking benefits, it would be a relatively large increase that I would want in my retirement planning now. Thanks for any assistance. 

[StevenC173520]

You should get your earnings history from SSA, and paste into the ssa.tools website.

You can look at your PIA details, and see how PIA increases with the yearly COLA

which is applied in January each year. My PIA has increase a lot since I turned 62 (coming up on 68).

You can use ssa.tools to look into the future to  see your benefit at 67 (or 70?) if you want.

No COLA for future benefits at ssa.tools or my ssa. I just get the latest PIA from ssa.tools, then

multply by an average COLA (2.5%?) for each year until the year I want to collect benefits.

Dont forget to mutiply the final PIA by your delayed retirement credit for the month you intend to 

collect. My final DLC at 70 will be 129% of my PIA at 70. HOpe this helps.

[WilliamS620760]

Thank you Steven for taking the time to provide all of this information - so helpful and very much appreciated. Why all this has to be so complex is beyond me but nice to know there are individuals like you willing to really help. All the best, Bill 

[StevenC173520]

Here are some numbers to show you what I have discovered about this:

YEAR                         COLA        PIA           DRC       MONTH    YR AMOUNT

2018                    62	0	2,577	73.33	$1,890	$22,680
2019                    63	1.028	2,649	78.33	$2,075	$24,903
2020                    64	1.016	2,692	84.44	$2,273	$27,274
2021                    65	1.013	2,727	91.11	$2,484	$29,810
2022                    66	1.059	2,887	97.78	$2,823	$33,880
2022         FRA PIA	1.000	2,887	100	$2,887	$34,644
2023                    67	1.087	3,139	105.33	$3,306	$39,671
2024                    68	1.032	3,239	113.33	$3,671	$44,050
2025                    69	1.025	3,320	121.33	$4,028	$48,338
2026                    70	1.025	3,403	129.33	$4,401	$52,813

[Tonster521]

@StevenC173520 I am trying to understand the data that you developed regarding COLA and the DRC. First, it appears the data is for someone born in 1956 (FRA attained in 2022) which is age 66 and 4 months. So, should the Row 2022 FRA PIA use only 8 months rather than 12 months for that Row's Yr Amount? It appears that you are using a calendar year for all other Rows. Second, as I understand the COLA provisions, one does not receive the past COLA amounts (paid retroactively) if you elect to delay your SS Benefits. For example, if one delays at FRA to age 70, you will not be paid the COLAs retroactively for 44 months (from FRA to age 70). Although the annual COLAs since FRA are included in your age 70 PIA, those amounts are payable from age 70 and thereafter. For the Row 2022 FRA PIA, the COLA will amount to $160/month X 44 months or $7,040 . For Row 2023,the COLA will amount to $252/month for 36 months or $9,072. For Row 2024, the COLA will amount to $100/month for 24 months or $2,400. For Row 2025, the COLA will amount to $81/month for 12 months or $972. If I added accurately, the missed COLAs totals $19,484. I am not aware of the SSA paying any such COLA amounts retroactively. So, to compare SS Benefits on an "apples to apples" basis, I believe you need to address COLA for the period one delays. There is also another concern; namely, the Delayed Retirement Credits that some folks forget or omit the SS Benefits they give up in order to receive a DRC. These may be beneficial, but you need to live longer than average life expectancy. https://crsreports.congress.gov/product/pdf/r/r47151/2 Hopefully, I linked the article accurately. 

[StevenC173520]

It's hard to understand your questions,  your punctuation hurts my head- but I will try. (no I am not punctuation police...)

The numbers in my table have agreed with my social security statements, minus any future cola's.

My 2022 entries are split into 2 lines. First one shows how PIA increased from 

2021. ($2727 * 1.059 = $2887). The second 2022 entry shows the same PIA amount since it's in the same year. PIA's increase each January the way I calculate. Then for the 2023 entry I show how PIA increased from $2887 to $3139. (8.7% increase)

For the years 2025 and 2026 I use 2.5% cola's, because this number is close to historical COLA increases (2.6%) and it's a nice round number.

COLA's are applied to my PIA each year whether I have claimed SS or not. 

I believe up to age 60 the AWI -Average wage index is used, but starting after 62 cola's are applied.

I am not one to worry about giving up benefits, since my wife is younger. 

I want to give her the best chance of a comfortable life after I am gone.

In this case that means delaying to 70. My PIA will be $3403 and my 29.33% Delayed ret. credit brings this to $4401. 70 is not too old to have fun in my opinion, given max SS payout with other income streams. I also like that SS is also partly not taxed, I want the most I can get of that please!

[Tonster521]

@StevenC173520 The first question is clear and simple. Should the Year Amount be developed using 8 months or 12 months or some other number of months? I know some folks have used periods after posting a question. However, I was taught in grammar school to use a question mark after posting a question. Hopefully, the question mark after my question is not the source of your confusion.  At any rate, if you are trying to provide a calendar year amount (YR AMOUNT), the amount is not accurate. For someone who attains FRA in 2022 (age 66 4 months), 8 months is the maximum number of months that are available without a reduction (adjustment) factor. Moreover, that person needs to be born in January of that calendar year. The other 4 months are developed using a reduction factor inasmuch as they have not attained FRA yet. If born in February 2022,it will be 5 months with a reduction factor and 7 months without a reduction factor, and, so on, and so on. The second point I raised was not in a question format,but in a factual format. You cannot be paid COLA if you are not receiving a SS Benefit payment. Perhaps adding "what if" disclosures indicating that if you are receiving SS Benefits such benefits may increase due to COLA. Lastly. you should take some time and carefully read the link, "Social Security: Adjustment Factors for Early or Delayed Benefit Claiming".

[StevenC173520]

I really have no idea what you are on about. I stand by my calculations, because they match up with both SS statements and Ssatools.

Here is how real COLA's have increased my PIA from Ssatools:

2018: $2,577.30 increased by 2.8% = $2,649.40
2019: $2,649.40 increased by 1.6% = $2,691.70
2020: $2,691.70 increased by 1.3% = $2,726.60
2021: $2,726.60 increased by 5.9% = $2,887.40
2022: $2,887.40 increased by 8.7% = $3,138.60
2023: $3,138.60 increased by 3.2% = $3,239.00

This matches the amounts I originally posted. I agree that my spreadsheet for 2022 has 2 entries, which may confuse some. The second entry is just a placeholder for calculating my FRA benefit.

In any case- you do you, and I will do me. 

[Tonster521]

@StevenC173520 Maybe the following will help. Your second entry for 2022 should indicate 1.059 for COLA not 1.00. You do not lose COLA at FRA. Granted, it is theoretical and just an estimate if you have not started SS Benefits. However, it will be paid to you or your survivor,if any, when SS Benefits are started. The Year Amount should be $23,096 ($2,887 X 8 months) not $34,644. Remember, if born in 1956, FRA is attained at age 66 4 months. I suggest you keep the logic consistent using ages and rename the row 2022  66.33 or 2022 FRA age 66 4 months. You may asterisk that row and include an explanation,"included to provide SS Benefit amount at FRA". It should be noted that the software you are using has already prorated the reduction factor for the first row 2022 to just  .0222 inasmuch as there are only 4 months pre FRA. FYI, the 12 month reduction factor is about .0666. And, for 2023, the software has prorated the DRC to just 105.33 instead of 108.00. This reflects the 8 month accrual or .6667 of the 12 month DRC at 8%. Lastly, COLA when available/declared, is payable immediately for folks in pay status. In other words, you do not have to give up (delay) any SS Benefits in order to receive COLA. This is real money, not an actuarial adjustment such as the DRC. Full disclosure, I retired in 2015 and there were 9 COLA increases (2016 through 2024). I agree with the original poster that COLA over a long life may be a significant amount of money. 

[StevenC173520]

One more point. In my speadsheet (of course we all have them!), I have a graph

that displays the above numbers AND the numbers from myssa. The numbers above keep going up, and the numbers from ssa keep pulling closer to my calculated numbers.

the 2 lines are right on top of each other, and just diverge slightly for the last 2 years

because ssa doesn't use future colas. I am very confident that you are going to get a lot more than ssa is telling you today.

[GailL1]

2023 data hasn’t been posted yet but this is how people covered under SSA  get their COLA - BEFORE THEY START RECEIVING BENEFITS.

It is used to figure ones’ benefits.

The AWI = Average Wage Indes

SSA.gov - National Average Wage Index

[WilliamS620760]

Hi Gail - thank you very much for taking the time to response and help; mind boggling to me that this has to be so convoluted! Cheers, Bill