Thursday, October 31, 2013
Social Security announces COLA; similar increases for federal retirees; more on the 35 highest years rule
Whatever the doomsday predictions of Social Security cutoffs a few weeks ago during Congressional brinksmanship, now we’re reassured of a 1.5% COLA increase in benefits starting January, 2014.
Social Security (whose website is rather popular, in great contrast to Obamacare’s “healthcare.gov”) has an account of the modest COLA increase here.
Eric Yoder, of the Washington Post, discusses the varied Social Security benefits for federal employees on p. B4 (“The Federal Page”) of the Post Thursday, October 31, 2013, where the discusses COLA and CERS and FSRS, systems which replace some or all of Social Security income.
In 1971-1972, when I worked for the Navy Department, I contributed to the Federal retirement system but did not pay FICA taxes. That may have reduced my benefit slightly by lowering the average of my top 35 years (as explained here at the “About” site, link ). These years get replaced by years of lower wages, like when I worked as an instructor at the University of Kansas, or later when I worked as a caller or debt collector, or substitute teacher. Still, my benefit, reduced further by starting at age 62 (because of the way my employer handled Social Security offset) is significant to my financial stability at age 70.
It’s not clear that those workers who benefited for two years from a 2-year FICA payroll tax cut could eventually see reduced benefits, especially after Congressional reform. I’ve advocated that Congress should protect legal ownership of some benefits based on lifetime FICA contributions (including legal spouses in some cases). But that would be a somewhat different actuarial concept from the “top 35 years” notion. Reform, in giving legal protection of benefits already earned from future partisan battles, is much in order during the budget negotiations that must be completed by Dec. 13.