Social Security consideration

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GDK
Posts: 15
Joined: Wed Jun 07, 2017 10:29 pm

Social Security consideration

Post by GDK »

I would expect it to do the flexible retirement planner considers Social Security income and increases it with a cost-of-living an allowance. The flexible retirement planner increases the social security benefit both before it is actually taken and after. At least this is what I think I see in the detailed results. My question is how close to reality is a cost-of-living allowance for Social Security that matches inflation? Does anyone have any reference for how well Social Security actually provides this cost-of-living allowance each year in terms of being able to accurately match inflation? I would presume that it is only possible to accurately match inflation with a cost-of-living allowance in hindsight.

Any insights would be appreciated!
FRPJunkie
Posts: 33
Joined: Wed Feb 24, 2016 8:17 am

Re: Social Security consideration

Post by FRPJunkie »

GDK wrote:I would expect it to do the flexible retirement planner considers Social Security income and increases it with a cost-of-living an allowance. The flexible retirement planner increases the social security benefit both before it is actually taken and after. At least this is what I think I see in the detailed results. My question is how close to reality is a cost-of-living allowance for Social Security that matches inflation? Does anyone have any reference for how well Social Security actually provides this cost-of-living allowance each year in terms of being able to accurately match inflation? I would presume that it is only possible to accurately match inflation with a cost-of-living allowance in hindsight.

Any insights would be appreciated!
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
https://www.ssa.gov/news/cola/

There is no way for the planner to perfectly predict what future SS COLA's will be, for obvious reasons. So, my understanding is the best it can do is roughly track the expected inflation field.
GDK
Posts: 15
Joined: Wed Jun 07, 2017 10:29 pm

Re: Social Security consideration

Post by GDK »

Thank you for the response FRPJunkie! Folks are probably wondering why I'm behaving cynically about whether or not the USG really provides a COLA that consistently helps to alleviate the degradation of their SS benefit. The reason is that, as most folks are keenly aware, SS is one of the few pensions these days that has a COLA -- and if it didn't or if it wasn't well implemented, many of our retirement plans would not "close."

Thank you for the input!
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