Cribbage Clubs Offer Competition, Camaraderie
Brides With Fancy Gowns, Garter Belts, DJs
Health Exchange Shopping
Tips for Uninsured Boomers and Early Retirees
Corner: Summer Is Culminating in Catnip and Catnaps
The ‘Notch’ — The
Social Security Issue That Just Won’t Die
frequently tell folks that despite the subject matter, my column
generally isn’t really for senior citizens. Once
you are getting a Social Security check, I really don’t have
too much news or information for you. But if you are approaching
retirement age (somewhere in your late mid 50s to early 60s)
then I have tons of advice to help you decide when and why
and how to
take your Social Security checks.
But this week, if you are under 85, you can stop reading
the column right now. (However, if you have a much older parent
or relative, you may want to keep reading
because today’s column refers to him or her.)
That’s because I’m going to trot an updated version of the timeworn “notch” column.
My email inbox has been filled lately with emails from elderly readers who keep
bringing up this tired old issue. My hunch is an article about the so-called “Social
Security notch” must have appeared in a national publication and it has
incensed older folks who will go to their graves convinced the government has
cheated them out of Social Security benefits that are rightfully theirs.
For those readers who don’t have a clue what I am talking about, the “notch” refers
to a time period when corrections were made to the Social Security benefit formula — corrections
that were necessary to ensure that all Social Security recipients were paid properly,
but corrections that were misconstrued by many to be a way of bilking them out
of benefits they felt they were due. Here’s the story.
In 1972, Congress passed a law mandating automatic annual cost-of-living adjustments — or
COLAs — to Social Security checks. Those COLAs were to be based on increases
in the government’s official inflation measuring stick: the consumer price
index. (Before 1972, COLAs were not automatic. They were sporadic and happened
only if Congress specifically authorized a yearly increase.)
As part of the new process, the Social Security Administration had to come
up with a formula for calculating increases to people’s Social Security checks — which
they did. But after COLAs were paid for a couple of years, someone noticed the
formula was wrong. Social Security beneficiaries were getting increases that
were slightly higher than justified by the actual increase in living costs.
Once the mistake was discovered and SSA notified Congress, several decisions
had to be made. For one, they had to figure out what to do about all of the
Social Security beneficiaries who received the overly generous COLA adjustments.
quickly decided to let them keep the money. (It would have been political suicide
to send overpayment letters to every senior citizen in the country demanding
repayment of the incorrectly paid funds.)
The second choice Congress had to make was to decide where to draw the line — to
figure out which people would have their benefits figured using the proper COLA
formula. And they drew that line at 1918. In other words, they said everyone
born in 1918 and later would have his or her Social Security benefit figured
using the corrected formula.
Sounds simple enough, doesn’t it? But sometimes Congress can’t leave
well enough alone. In this case, they bowed to pressure from senior citizen groups
who demanded a transition period from the old (incorrect) formula to the new
(proper) formula. After lots of haggling, what they eventually decided is that
everyone born between 1918 and 1921 would have his or her benefit figured using
a special formula.
So, we ended up with the following scenarios: People born after 1921 had their
benefits figured using the proper (and lower) COLA formula; people born before
1918 had their benefits figured using the incorrect (and higher) formula, and
people born between 1918 and 1921 had their benefits figured with a special
formula not quite as generous as the one used for the pre-1918 crowd but more
than the one used for the post-1921 crowd.
You’d think everyone would be happy, right? Well, what happened next was
pretty bizarre. Social Security recipients born in 1918 and later started to
complain that they weren’t getting quite as much as folks born 1917 and
earlier. Someone should have splashed some cold water in their faces and said, “Duh,
you are being paid correctly. It’s the folks born before 1918 who are getting
overly generous benefits.”
Instead, mobs of angry senior citizens around the country started to form into
groups demanding justice. Even Ann Landers got into the fray, labeling people
born between 1918 and 1921 “notch babies.” They mistakenly thought
they were singled out for lower benefit adjustments than everyone else. To repeat
the facts: They were getting slightly lower benefits than people born 1917 and
earlier, but they were getting higher benefits than everyone born from 1922 on.
Then lobbying groups got into the mix and really muddied things. They sent
letters to folks born in the so-called “notch years” telling them they were
being cheated out of Social Security benefits and asking for donations to fight
this injustice. And to help fill their coffers even more, the lobbyists craftily
expanded the definition of those notch years to include everyone born through
1926. Some inexplicably even pushed the “notch” cutoff into 1930s!
So, senior citizens of all ages started sending in tens of millions of dollars — money
that paid for many overpriced lobbyists and some pretty nice office space on
K Street in Washington, D.C. — but money that accomplished nothing else.
After all, there really was no injustice to fight.
Sadly, millions of seniors born between 1918 and 1926 or even later went to
their graves bitter and disappointed — including my own mother! Those still alive
believe to this day that they are being cheated out of Social Security benefits.
Shame on all those folks who perpetuate this myth.
TOP | HOME
This page and its contents ©2013
Metropolitan News Company, Inc.