----- Original Message ----- From: "Nick Arnett" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[email protected]> Sent: Friday, February 18, 2005 9:45 AM Subject: Real cost of living (was Social Security reform)
> Erik Reuter wrote: > > > The benefit formula has been indexed to wages for years. > > No. COLAs are based on the Consumer Price Index, which is based on a market basket of goods. > That's true, but the initial benefits are not based on COLA. Quoting the government website on this: http://www.ssa.gov/history/notchfile1.html <quote> Fixed Formula Introduces Wage Indexing Thus the old law generated, under some economic conditions, inflated initial benefits by linking, or "coupling," the effect of both wage and price increases. The 1977 legislation "de-coupled"(23) those two elements, substituting a fixed formula for determining initial benefits:(24) 90 percent of the lowest range of average indexed monthly earnings, plus 32 percent of the mid range of such earnings, plus 15 percent of the highest range of such earnings (up to a maximum based on amount of earnings on which taxes are paid). Like the old approach, this new approach used average earnings over a "working lifetime." But those earnings would now be adjusted ("indexed") to reflect the growth of wages in the economy Cin other words, past wages would be translated into their equivalent in current wage levels.(25) <end quote> I was wrong about the last time inflation beat average wages being in the Great Depression. But, it is very clear that COLA increases are only applicable to people _already_ receiving SS. Initial benefits are tied to wages. The only way I can see to differ with this is to assume that the government site listed above has false information. Dan M. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
