Quote:
Originally Posted by Aces4
Not at all odd, the extra tidbit isn't close to covering all the price increases. The SS incomes are fixed to income numbers prior to the retirement date. If one has been retired 20-30 years, there is a large gap between older seniors and new retirees wage basis for SS. The small fluff added to low SS income doesn't cover squat.  |
Actually, if you look over the past 10 years (because I got tired of typing numbers) the Social Security COLA numbers track the September inflation numbers very closely. 2016 was an anomaly where inflation was 1.5% but the COLA was only 0.3%.
If you add the numbers for the 10 years you get 30.8% for inflation and 30.0% for COLA. A loss of 0.8% over that time but that doesn't seem like much. The rates are actually compounded from year to the next but I haven't taken the time to figure out the equation for that.
As for SS payments to someone who retired 20 years ago and someone who retires today, there is more work to determine what that gap may be but my guess is it has to do with wages increasing faster than inflation. If wage increases have outpaced inflation then initial SS payments will have outpaced inflation as well. The SSA maintains a chart for
average wage increase by year. It shows that wages have increase a cumulative 43.45% over the past nine years (2024 data isn't available yet), much greater than inflation.
So if the starting SS is roughly tied to ending wages and the SS COLA generally keeps pace with inflation but wages increase faster than inflation then the starting SS for someone today will be more than the COLA-adjusted starting SS for 20 years ago.
Does it *feel* like wages are keeping up with inflation? Probably not. Do people's feelings generally track with reality? No. But think about how much "stuff" we absolutely need and can afford today compared to what we had when we were growing up. My family had one television and a record player. Vacations were camping in a tent and later a pop-up trailer. I spent most of my summer riding my bicycle or running around with friends. Today, multiple flat-screen smart TVs with a sound system are essential. We pick which country we are going to fly to for vacation and make hotel reservations (or splurge on Disney). It is nearly impossible to get kids off their devices (phones, tablets, gaming consoles) to get them outside. My parents didn't amass a huge bank account with the money they saved by NOT buying the things kids have today while today's parents are usually able to save a little even after buying all of today's "necessities." How can that be if wages have not increased faster than inflation and are now able to buy more?
Note: Not an economist, just someone who can google data, add numbers, and remember what constituted a good standard of living a few decades ago.