RadioBDC Logo
Miss Teen Massachusetts | SKATERS Listen Live
 
 
< Back to front page Text size +

Social Security benefits and inflation

Posted by Andrew Chan  March 31, 2009 11:00 AM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

I get a statement every year regarding my future social security benefits. It now says I should be entitled to $1,500 dollars per month at age 65 (I'm now 40). Will this amount be increased for inflation? (e.g., compounded at 3 percent over 25 years it will be about $3,100 per month). Thanks.

Yes, based on the current social security system, your social security benefits are adjusted for inflation each year. This inflation adjustment is referred to the Cost-Of-Living-Adjustment (COLA). In October of last year, the Social Security Administration (SSA) announced that benefits paid in 2009 would include a COLA of 5.9 percent. This COLA is based on a variation of the Consumer Price Index known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The 2009 COLA of 5.9 percent is the largest in 26 years and should increase the average retiree’s benefits by about $60 dollars per month, according the SSA. During the past 15 years, the social security COLA has averaged about 3 percent per year.

The estimated benefits shown on the social security statement mailed to you each year is in today’s dollars. You can calculate your estimated future benefit by inflating the current benefit by an average inflation rate for each year until retirement. The SSA also has an online benefits calculator that you can use to estimate your benefits in today’s dollars and in future dollars (http://www.ssa.gov/retire2/AnypiaApplet.html).

To learn more about your estimated social security benefits and the statement you receive each year, visit the SSA web site at www.ssa.gov.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

E-mail your question

Name:
E-mail:
Your question/comment:
archives