The Motley Fool

MAY 3, 2024

How Social Security COLAs are calculated Social Security COLAs are calculated based on third quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers. When that index rises from one year to the next, Social Security benefits tend to follow suit. Image source: Getty Images.

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The Motley Fool

JANUARY 16, 2024

Image source: Getty Images How Social Security calculates your benefits To calculate your retirement benefits , Social Security uses the 35 years when your earnings were the highest. These earnings are indexed (meaning adjusted for inflation), so they can be compared consistently through the years. Social Security tax.

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The Motley Fool

MARCH 31, 2024

The index currently sits within a percentage point of its record high, but upward momentum has stretched valuations across the stock market. How the discounted cash flow calculation works The discounted cash flow (DCF) formula looks intimidating on paper. Shown below is a DCF calculation for Apple using this calculator.

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The Motley Fool

APRIL 21, 2024

As you'll soon find out, there's wiggle room with every metric and you should spend some time with a handy 401(k) calculator, like this CalcXML tool: *Calculator is for estimation purposes only, and is not financial planning or advice. In reality, the S&P 500 (SNPINDEX: ^GSPC) market index has delivered an 8.4%

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The Motley Fool

MAY 16, 2024

The scorecard compares the performance of active funds to the S&P indexes over periods of one, three, five, 10, and 15 years. Jack Bogle started the Vanguard Group and the first-ever index fund because he saw how fees impact the performance of the average investors. The wealthy elite, however, look to beat the market returns. "My

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The Motley Fool

MAY 9, 2024

This estimate is based on the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data. CPI-W is a consumer price index that tracks how the cost of goods and services shift over time. The COLA is actually calculated using the average of the CPI-W data for the third quarter of the year.

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The Motley Fool

MAY 12, 2024

How Social Security determines the cost-of-living adjustment Before we can dive into why the 2024 COLA is falling short of retirees' needs, it's important to understand how the government calculates the annual cost-of-living adjustment. Most people are familiar with the CPI, or Consumer Price Index.

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The Motley Fool

MAY 8, 2024

A lot of this is down to how the government calculates COLAs. They're based on the difference in third-quarter inflation data from the Consumer Price Index for Urban Workers and Clerical Workers (CPI-W) from this year and last year. It sounds reasonable in practice, but the CPI-W only represents about 30% of the U.S. population.

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The Motley Fool

FEBRUARY 3, 2024

Specifically, while Social Security payments get an annual cost-of-living adjustment (COLA) to offset inflation, those adjustments are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). higher today if the CPI-E had been used to calculate COLAs during the past decade (i.e.,

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The Motley Fool

APRIL 25, 2024

The Vanguard 500 Index ETF (NYSEMKT: VOO) is one of the most popular ETFs (exchange-traded funds) , and for good reason. Vanguard made a name for itself by offering low-cost index mutual funds and later expanded its popular offerings to ETFs. The Vanguard 500 Index Fund ETF is a great introduction to investing for many people.

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The Motley Fool

NOVEMBER 5, 2023

million Calculations by author. Growth is calculated on a compounding basis. Growth is calculated on a compounding basis. Most people, though, would be better served by opting for a simpler approach -- investing in low-fee stock index funds, either in mutual fund or exchange-traded fund (ETF) form. Large Cap Growth Index.

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The Motley Fool

APRIL 28, 2024

But the 2025 COLA forecast exposes a flaw in the way COLAs are calculated that may shed light on the situation. There is a major flaw in the Social Security COLA calculation Social Security benefits get annual cost-of-living adjustments (COLAs) to help retired workers and other recipients keep pace with rising prices.

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The Motley Fool

MAY 11, 2024

The 2025 COLA announcement is a few months away The government calculates Social Security cost-of-living adjustments (COLAs) by looking at third-quarter inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Here's when you can expect the announcement and what the COLA could look like.

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The Motley Fool

MAY 15, 2024

That's when we'll get the last key piece of information needed to calculate it. This has to do with how the government calculates COLAs. It looks at the difference in the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year and the previous year.

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The Motley Fool

APRIL 21, 2024

Over time, your returns will increase at the index's long-term average rate of around 10%. One fund that is particularly attractive is the Vanguard Growth Index Fund (NYSEMKT: VUG). Calculations by author. Should you invest $1,000 in Vanguard Index Funds - Vanguard Growth ETF right now? Year Balance 5 $26,160.22

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The Motley Fool

MAY 16, 2024

The second factor has to do with the way the SSA calculates your average wages to determine monthly benefits. It takes your 35 highest-earning years and adjusts them for inflation , using the average wage index, which tracks how much workers get paid on average each year. The SSA estimates just 6%.

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The Motley Fool

DECEMBER 21, 2023

How Social Security COLAs are calculated The whole idea of a Social Security COLA is to help seniors' checks keep pace with rising costs, so it makes sense that the government bases its COLAs on the rate of inflation. It found that calculating COLAs using the CPI-E nearly always resulted in a higher COLA than the current CPI-W method.

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The Motley Fool

SEPTEMBER 23, 2023

Calculations by author. Calculations by author. Calculations by author. 800,000 Calculations by author. Growth Rate Years to Double According to Rule of 72 2% 36.0 Years to Double According to Rule of 72 Growth Rate Three 24% Four 18% Five 14.4% Six 12% Seven 10.3% Eight 9% Nine 8% 10 7.2% years: Age Investment Total 35.0

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The Motley Fool

MARCH 13, 2024

A flawed system Social Security COLAs are based on third quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. One major flaw in the way Social Security COLAs are calculated is that healthcare is a major expense for retirees, and one that tends to increase exponentially from one year to the next.

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The Motley Fool

APRIL 17, 2024

If you want to become a millionaire without knowing anything about investing, your best bet may be to buy an ETF that tracks the performance of a financial index called the S&P 500. The companies that are part of this index are household names. When you buy an S&P 500 index fund, you own a little bit of all of them.

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The Motley Fool

MAY 2, 2024

Many readers are probably familiar with the Consumer Price Index. The Social Security Administration measures inflation using a subset of that metric known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Social Security benefits are on track to get a 2.6%

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The Motley Fool

MAY 6, 2024

The way the Social Security Administration determines the COLA each year is by using the average inflation rate in the third quarter, as determined by the consumer price index. The Consumer Price Index (CPI) reading for March came in at 3.5%. That's not necessarily a good thing for seniors, though. Image source: Getty Images.

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The Motley Fool

FEBRUARY 11, 2024

The two ETFs I have in mind are the iShares Morningstar Small-Cap Value ETF (NYSEMKT: ISCV) and the Vanguard Small-Cap Value Index Fund ETF (NYSEMKT: VBR). The Vanguard ETF attempts to track the CRSP US Small Cap Value Index, which includes stocks covering 85% to 98% of the market caps of the broader U.S. stock market. stock market.

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The Motley Fool

MAY 18, 2024

The S&P 500 (SNPINDEX: ^GSPC) made a new record high earlier this year, cementing the bull market that began when the index bottomed in October 2022. The Vanguard Group is one of the largest issuers of ETFs in the world, and it offers several funds designed to track the performance of popular indexes like the S&P 500.

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The Motley Fool

FEBRUARY 17, 2024

You can get there with just a couple of simple index funds. One of the most effective ways to build a sizable portfolio is by investing in an S&P 500 index fund such as the Vanguard S&P 500 ETF (NYSEMKT: VOO). The ETF tracks the performance of the S&P 500 index, which includes 500 of the largest profitable U.S.

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The Motley Fool

DECEMBER 9, 2023

From the 35-years perspective, Social Security uses your highest 35 years of Average Indexed Monthly Earnings to determine your benefit amount.In If you have more than 35 years of earnings, your higher earning years will override your lower earning ones, adjusted for that indexing calculation.

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The Motley Fool

FEBRUARY 18, 2024

It's an index of 500 of America's biggest and best corporations. Many consider the S&P 500 index the gold standard for the U.S. Applying the Rule of 72 The Rule of 72 is one of my favorite tools for back-of-the-envelope math -- rough calculations you can do quickly. In other words, it's a broader bet on America's economy.

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The Motley Fool

MAY 19, 2024

Unfortunately, there's a problem with the way the COLA is calculated, which has resulted in Social Security benefits increasing too slowly to actually keep pace with the inflation seniors are experiencing. Now, there are some proposed fixes, such as switching to a different consumer price index that could result in larger raises for retirees.

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The Motley Fool

MARCH 13, 2024

If you're not a great stock-picker and don't want to invest the effort in trying to become one, you might reasonably simply opt for low-fee, broad-market index funds , which can be all you need to build wealth powerfully over many years. Large-Cap Total Stock Market Index , plunking its investors in the 750 largest U.S.

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The Motley Fool

FEBRUARY 17, 2024

How your Social Security retirement benefits are calculated Let's first take a look at how your Social Security retirement benefits are calculated. The end product of this indexing process is your average indexed monthly earnings (AIME). First, they were calculated based on data available in December 2022.

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The Motley Fool

FEBRUARY 10, 2024

A growth-oriented investment such as the Vanguard Growth Index Fund (NYSEMKT: VUG) can be an especially attractive option. Calculations by author. Simplify the process further by choosing a low-cost, diversified ETF like Vanguard Growth Index Fund, and you can be well on the way to reaching your long-term financial goals.

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The Motley Fool

MAY 18, 2024

But buying the highest-yielding stocks that have already been preselected for inclusion into an index is at least likely to cull out some of the worst options. just Dow from now on) is a large chemicals company, and it yields roughly 4.7%, which is fairly attractive given that the yield on the S&P 500 index is a tiny 1.3%.

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The Motley Fool

FEBRUARY 15, 2024

Index funds lack the excitement of individual stocks. Moreover, outperforming the major stock market indexes over an extended period is hard. Indeed, Warren Buffett once wrote, "By periodically investing in an index fund, for example, the know-nothing investor can actually out-perform most investment professionals." Apple : 11.7%

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The Motley Fool

FEBRUARY 4, 2024

Earn over the wage base limit Social Security calculates your monthly benefit using your average earnings during the 35 years when your income was the highest. It adjusts your earnings for inflation and then divides the total number of months in those 35 years to get your average indexed monthly earnings (AIME).

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The Motley Fool

APRIL 25, 2024

It won't be settled for a while yet, since the benefits bump is based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) showing how much prices have risen year over year. Getting four years of big raises isn't actually as great as it might seem for a couple of reasons.

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The Motley Fool

JANUARY 22, 2024

These funds are: Vanguard 500 Index Fund (NYSEMKT: VOO) : This fund replicates the benchmark S&P 500 index, which represents the 500 largest companies in the U.S. In other words, we will use the following expected annualized returns over a 42-year period for each fund: Vanguard 500 Index Fund: Risk-adjusted return of 7.2%.

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The Motley Fool

JANUARY 27, 2024

19, the index also surpassed its previous all-time high, making it official by all measures that a bull market is here. Vanguard S&P 500 ETF The Vanguard S&P 500 ETF (NYSEMKT: VOO) tracks the S&P 500 index , meaning it aims to mimic the index's composition and returns over time. But on Jan.

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