Ask Larry

Can you please expand on your answer: https://maximizemysocialsecurity.com/will-just-announced-cola-apply-benefit-rates-people-born-1960
I was born in April 1960 and I will start social security benefits this year in May 2022. How will my benefits compare to equivalent recipients born in either 1959 or 1961?

Hi. There's no major difference in how benefit rates would compare for someone born in 1960 vs. 1959 or 1961. Different indexing factors are used to calculate the base primary insurance amount (PIA) for each year of birth, though, so there would be some differences. And, people only receive credit for Social Security cost of living increases that occur after they reach age 62, so people who reach age 62 in 2022 or later won't be credited with the recent 5.9% COLA when their Social Security retirement rate is calculated.

However, the different indexing factors largely offset the lack of COLAs for people who haven't yet reached age 62. Basically, retirement benefit rates are adjusted based on increases in the national average wage index (AWI) up until a person reaches age 62, and then they are adjusted based on COLAs after that. For more information, refer to the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10070.pdf.

Best, Jerry