Using largely the CPI-W information gathered by the Bureau of Labor Statistics, the COLA for Social Security is calculated by averaging the July, August, and September inflation estimates. Recent months saw rises in the CPI-W of 3.6% in July and 3.4% in August. As a result of several circumstances, including significant supply chain problems, a rise in consumer spending, and pandemic stimulus funds, inflation in 2022 hit its highest point in 40 years.
Retirement Social Security Benefits
The Federal Reserve reacted by swiftly hiking interest rates, which led to the highest benchmark interest rates in the United States in more than 20 years. Despite a slight slowdown in the economy in 2023 equated to the previous calendar year, inflation is still high compared to the levels seen in the 2010s. Retirement Social Security benefits are anticipated to observe a COLA of about 3.2% in 2024. The average recipient’s monthly payments could rise by around $57 due to this increase, which is slightly more than previously projected and could bring their estimated total to $1,790.
Your AIME serves as the foundation for your Social Security payout. The SSA adjusts your actual wages for every year employed to determine AIME, giving later career earnings more weight. The 35 greatest indexed income years are then averaged, and the sum is divided by 12 to determine your AIME. The SSA establishes your Primary Insurance Amount (PIA) via a formula based on the AIME and your first year of eligibility.
Individuals Who Claim Social Security Benefits After Age 62
Only those who claim benefits for retirement after age 62 are impacted by COLA changes. These adjustments are made between the time you initially became eligible at age 62 and your filing date. The 35 greatest indexed income years are then averaged, and the sum is divided by 12 to determine your AIME. The SSA establishes your PIA via a formula based on the AIME and your first year of eligibility. Only those who claim benefits for retirement after age 62 are impacted by COLA changes. These adjustments are made between the time you initially became eligible at age 62 and your filing date.
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