What will next year's COLA be for SS

[cat0w]

Could Social Security Get an Even Bigger Raise in 2023? (msn.com)

[fffred]

I haven't investigated this point particularly but I have wondered, what if there is deflation? can there be a negative COLA? can the SS benefit be reduced? 

The answer seems to be "no" from a few documents I just found via Google. For example, https://socialsecurityreport.org/is-it-possible-for-cola-to-be-0-or-even-a-negative-amount/. Indicates that by law there can't be a negative COLA.

And this begs the question, let's say that there is a state of high inflation but the average wages are not keeping up with this rate of inflation (a not unrealistic possibility, no?). This would imply that SS beneficiaries would be getting a COLA that could be greater than the average worker's wage increases, which seems to be an unfair situation for the workers and untenable for the long term. I don't know if this realistically ever might be the case but I hope the economics professionals have this scenario planned out.

[GailL1]

@fffred wrote

. . . . by law there can't be a negative COLA.

That's true - based on the Hold Harmless clause in SS.  Course, that also means that for most people Medicare Part B premiums don't rise either.

@fffred wrote

And this begs the question, let's say that there is a state of high inflation but the average wages are not keeping up with this rate of inflation (a not unrealistic possibility, no?).

The only scenario where I see this happening is if people are living off of credit or emergency funds (which soon would not be replenished)  and not wages and a recession wouldn't be too far behind.  

[fffred]

@GailL1 

That "Hold Harmless" clause is interesting, I'd never paid too much attention to it in the past (since I'm not yet collecting benefits other than Medicare). But I looked it up. This recent Forbes article points out "the big caveat here is that retirees who are subject to IRMAA are not protected by the Hold Harmless Provision." I'm not certain if that was your point that you bolded in your post. Still I think it's worthwhile explicitly pointing this out to readers. See https://www.forbes.com/sites/davidrae/2022/01/25/why-your-social-security-check-might-drop-in-2022/?...

[al45009948]

Hello everyone 🤗. ( This is just my opinion ) Would a bigger cola for ss really make a difference, the cost of Everything is more than the cola that we receive. Medicare , food , rent , medical supplies, transportation and just every day expenses are creating more and more of us that can't afford to pay for our medication and putting more of us out on the street. How about a little Stimulus check for seniors once a month. I'm just saying

[GailL1]

@al45009948 wrote:

How about a little Stimulus check for seniors once a month. I'm just saying.

• Should it be for those who took early retirement recently, meaning those who have had their benefit check reduced by 34% because they took early retirement?
• Should it be for those who took early retirement and are still less than their FRA and are still working and having their retirement benefits reduced because they are over the annual earnings limit?

I just find it ironic that some ask the government for more when they may have given up more because of their choice.  

Many folks seem to be very short-sighted in their financial planning.

[GailL1]

Guess we could but who knows how inflation will pan out later in this year.  I believe the COLA for the next year is figured on (CPI) data thru Sept. but it picks up data for the last few months of the previous year; which seems like it was the beginning of this faster rate of inflation.  So not many more months to go - (7).  A long way in breaking the all time high - 1980 - 14.3%.  

I think I am more concerned about how Part B premiums will be affected.  

[fffred]

---

---

---

@GailL1 wrote:

... A long way in breaking the all time high - 1980 - 14.3%.  

---

And this is why we need to fact check things we read in the press, etc. 

I was just reading this article at Yahoo! finance (definitely not one of my usual sources but it came up in a search result). Author states with the first sentence "This year, the highest COLA ever will be applied to benefits, with a 5.9% increase to account for rampant and sudden inflation during the pandemic." (https://finance.yahoo.com/news/social-security-recipients-extra-200-200002115.html)

Well, I knew that was wrong, and I remembered reading Gail's comment a few minutes before. A quick trip to the SSA site gives the facts (I was going to say "true facts", but there are no "false facts", right?). As Gail mentions, the highest in recorded history was the 14.3% in 1980. 1981 was runner-up with 11.2%.

https://www.ssa.gov/oact/cola/colaseries.html

[GailL1]

Yep, those were the days of "real" inflations - I opened my 1st IRA in (I think) 1981 or 1982 - whatever the 1st year IRA's went into effect.  I invested in a $ 500 CD at the top rate of 21% per annum.  

I thought at the time, hey, this retirement thing is gonna be easy !  😮  Surprise !

[Tonster521]

@GailL1 You are correct with regard to measuring data through September of a given year. However, the SS formula only compares the average of the third quarter (July, August, September) of the present year versus the average of the third quarter of the prior year or the last year of a COLA. I am linking in info from SSA https://www.ssa.gov/oact/cola/latestCOLA.html The SSA uses the CPI -W which is hourly wage related. God forbid the SSA should use salaried compensation. If the SSA used such, we would receive greater increases and maybe fair better in the challenge to keep up with "real" inflation. At any rate, using CPI -W is better than nothing at all.

[GailL1]

Thanks - @Tonster521  - I got it now.

I read that if medical cost were included in a special CPI for (over 62) seniors (I think it is CPI-E) which they run as an analysis - the increase would be .02% higher.