[Bill14564]

Originally Posted by tophcfa

The key assumption in the article is that they are adjusting grocery affordability based on wage increases. That doesn’t mean squat for seniors living on a fixed income.

Isn't it odd to call it a "fixed income" in a thread about that "fixed" income receiving an increase next year?

[fdpaq0580]

Originally Posted by tophcfa

Not sure how those stats are calculated, but does anyone in their right mind actually believe food went up only 2.3% in the last year?

Probably has to do with where you live, where you shop, what you buy, etc.

[Aces4]

Originally Posted by Bill14564

Isn't it odd to call it a "fixed income" in a thread about that "fixed" income receiving an increase next year?

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.

[tophcfa]

No worries, inflation is going down. Let’s look at a simplified example of how we are being manipulated into believing that.

Last year something that cost $5 dollars went up to $6, or it went up a dollar. That’s a 20% increase (1/5).
This year it went up another dollar, to $7. But wait, that’s only a 16.67% increase (1/6).
So both of the last two years the item went up a dollar each year, but the great news is that inflation is down 3.33% (20-16.67).

[Mrfriendly]

Originally Posted by dewilson58

More than 72.5 million beneficiaries will see a 2.5% increase to their Social Security and Supplemental Security Income benefits in 2025, the Social Security Administration announced on Thursday.

Still holding off taking Social Security but nice to know it will be a little more each month.

[biker1]

I don’t know about the increase in my Medicare Supplement Plan yet as the premium increases occur in July and not January. I do know my Part D Drug Plan will stay at $0 per month. Depending on your Part D Drug Plan and the prescriptions you are taking, changes in Part D could wind up saving you money in 2025. However, the Medicare Part B premium will probably be rising by about 6% or about $10 per month.

Originally Posted by Mleeja

You can supply all the stats you want. However, I know just my Medicare supplement and Part D drug plan have increased more than 3.6% for next year. These two items alone far surpass any increase received from SSI.

[klohmann]

Originally Posted by tophcfa

Not sure how those stats are calculated, but does anyone in their right mind actually believe food went up only 2.3% in the last year?

Just to let folks know if they already don't:
COLA for SS is computed using the average of the last three months in a fiscal year:
July, August, and September and the same period from the year
before.
The formula used is:
PY = previous year
CY = current year
((CY-PY)/PY*100)/100

BTW July-September has also been noted as being the months that for some reason is generally a period where inflation slows and picked, according to the government as allowing enough time to compute and adjust payments for the COLA.

[MandoMan]

Originally Posted by tophcfa

Not sure how those stats are calculated, but does anyone in their right mind actually believe food went up only 2.3% in the last year?

Remember, this is from September 2023 to September 2024, and it is an increase on what you already consider huge price increases. A lot of the increase happened more than a year ago. This is building on top of that. It is NOT a measure of how much the price of food has goon up since 2020. You got a much larger Cost of Living Adjustment last year because inflation was much higher, and you continue to get that. It’s not a one time thing.

The purpose of the Social Security COLA is not to raise it more than it’s gone up in the last year and give you a raise, but simply to help you keep up.

What’s more, the grocery inflation percentage is based on the average price of many things, some of which didn’t go up at all and some of which you never buy. I know some things I buy pretty often seem to have gone up 25% recently, but lots of things are the same as a year ago.

The Consumer Price Index also factors in prices that have gone DOWN. Gas is down about 15%. A lot of people are so used to watching TV news that tells them that the prices of everything have gone up so much that they don’t realize that this is not necessarily accurate or comprehensive. Here are the actual percentages for this year and last year from the Bureau of Labor Statistics, used for figuring out your COLA:
Access Denied

This explanation is two years old, but still helpful:
What’s inside the consumer price index? | Pew Research Center
“ The Bureau of Labor Statistics (BLS), which is responsible for the CPI, starts by collecting price data for hundreds of discrete goods and services – the so-called “market basket” – from around 8,000 housing units and 23,000 retailers, service providers and online outlets in 75 urban areas around the country. Data on rents is gathered from some 50,000 landlords and tenants.”

[Bill14564]

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.

[Caymus]

Originally Posted by tophcfa

Not sure how those stats are calculated, but does anyone in their right mind actually believe food went up only 2.3% in the last year?

Some of it depends on where and what you eat. Restaurant food inflation went up about 4 times in home food. That happened even though they mostly buy at lower wholesale prices. Meat, fish and eggs went up more than most other foods.

[Wilson02852]

The estimated average monthly Social Security benefit payable in January 2025 will now be $1,976 after the 2.5% COLA, up from $1,927 for 2024. That's a whooping $588.00 a year, $49.00 a month or roughly $12.00 a week. Don't spend it all in one place. My electric bill went up more than that.

[Bay Kid]

They have created "Funny Money"

[FredMitchell]

Originally Posted by Bill14564

Isn't it odd to call it a "fixed income" in a thread about that "fixed" income receiving an increase next year?

I agree that it is odd. What about your income is "fixed"? It is a silly misnomer. It probably also inhibits intelligent investing. If your income truly is fixed, you should get a financial adviser to change your investment portfolio.

Interest rates are not fixed. They change daily. The return on long term securities is not fixed. Unless it is zero coupon, the bulk of the return comes from reinvestment income. Unless you are near death, some of your savings should still be in equities, including indexes based on non-US companies.

[Boffin]

Been going broke saving money for years.

[Andyb]

Originally Posted by dewilson58

More than 72.5 million beneficiaries will see a 2.5% increase to their Social Security and Supplemental Security Income benefits in 2025, the Social Security Administration announced on Thursday.

Well, we are still behind by about 18% from the inflation debacle. It’s almost a slap in the face.