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☕ DrinkCoffeeAndProfit
Smart money moves before breakfast
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Inspiration Quote for the Day
“In God we trust; all others must bring data.”
W. Edwards Deming
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The Morning Ritual
Marilyn Wrote Next Year's Raise on the Calendar. She Copied the Wrong Number.
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Marilyn is `71`. She keeps a paper calendar on the wall by the toaster, and last month she wrote `3.4%` in the October square. That was the figure on the evening news. She had it filed as next year's Social Security raise.
It is not her number. Her raise comes off a different index, measured across three months only, and two of those months are already shut. The second one gets published tomorrow morning. Very few people at a kitchen table know that.
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In One Sip
► Tomorrow at 8:30 in the morning, Eastern, the Bureau of Labor Statistics publishes August consumer prices. That is the second of the three readings that set next year's raise.
► The raise does not come off the headline figure. It uses CPI-W, a separate index built on what wage earning households buy. That index gets averaged over July, August and September, against the same quarter a year earlier.
► July is already closed at `3.4%`. The last reading lands October 14, and the official raise is announced that same day.
► The published estimates now sit between `3.2%` and `3.6%`. Last year's raise came in at `2.8%`.
► Here is the part that gets skipped. The October number is gross. The Medicare Part B premium is set separately, later, and it comes out before the deposit reaches the account.
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· · · Partner Message · · ·
You’ve worked hard for retirement: now make sure you’re getting everything you deserve. These 10 little-known money moves could make a big difference.
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Why It Matters for Your Money
Take the average retirement benefit the Senior Citizens League works from, `$1,937.53` a month. At `3.6%` that is +`$69.75` a month, or about +`$837` across the year.
Now the part that outlives the raise. The distance between the low estimate and the high one is `0.4` of a point. On a `$2,000` check that is `$8` a month, +`$96` a year.
`$96` sounds like nothing. It is not one year of `$96`. Every future raise is figured on the new base. So that gap rides along for the rest of your life, and for a surviving spouse after that.
The number on the broadcast changes nothing on your deposit. The index that never makes the broadcast decides all of it.
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The Wealth Angle
Here is where it gets interesting. CPI-W follows the spending of working households. They put more of each dollar into gasoline and less of it into medical care than a retired household does. So the raise is measured against somebody else's shopping cart.
Which produces a strange result this week. Gasoline at `$4.15` a gallon pushes that index up, and a higher index lifts the raise. The same pump that empties the tank is arguing for the check.
A bigger raise is also not a gift. It is repayment for prices that already went through your kitchen, arriving a year late. And it can carry you across a line that has not moved in decades. Benefits start being taxed once provisional income passes `$25,000` filing single, `$32,000` filing jointly. Congress set those in 1983 and never indexed them. The raise climbs every year. The threshold sits still.
So I do not plan around the estimate. I plan around the base and the deduction, because those two are what actually reach the account.
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☕ Key Insight:
Your 2027 raise is already two thirds decided, and the open third prints tomorrow morning. It shows up gross in October and smaller in the deposit. Knowing which number is which is the whole distance between planning and hoping.
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Coffee Break Move
Find your current gross monthly benefit. It sits in the my Social Security account, or on the letter that arrived in January. Write that dollar figure on the calendar, next to where Marilyn wrote a percentage.
If you are comfortable: multiply it by `1.032` and by `1.036`. That range is your 2027 envelope. Then add half your benefit to your other income and see how close you already sit to `$25,000` or `$32,000`.
If you are stretched: on `$1,400` a month the whole argument is worth between `$45` and `$50` a month. Small. Still yours to know before somebody announces it to you.
Tomorrow the news will report a percentage. Your calendar needs a dollar.
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