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Born in 1960? Expect a Big Social Security Cut
05-25-2020, 02:28 PM
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#1
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Recycles dryer sheets
Join Date: Oct 2011
Posts: 81
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Born in 1960? Expect a Big Social Security Cut
For those born in 1960, the unemployment arising from the COVID-19 pandemic will cause a decrease the Social Security benefit from 9-14%. Part of the benefits calculation uses the Average Wage Index for the year a person turns 60. The AWI for 2020 was projected at $55,642, now it’s expected to fall to $50,171.
Wages earned before turning 60 are adjusted to the AWI for the year a person turns 60. The higher the index the year you turn 60, the bigger the adjustment, and the lower the index...
This impacts your entire lifetime of benefits if you are one of the unlucky ones, ranging from $24k to $85k depending on earnings and life expectancy. Contact your congressional representatives and ask them to address this if you were born in 1960.
https://www.forbes.com/sites/bobcarl.../#1d55a2825245
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05-25-2020, 02:38 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,197
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I was born in 1960. Unbelievable.
See the below Bogleheads discussion below.
https://www.bogleheads.org/forum/vie...11036&start=50
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TGIM
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05-25-2020, 03:17 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,962
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‘The indexing takes place for the year you turn age 60 and ends there. Those born in 1960 reach their 60th birthdays in 2020. Earnings after age 60 aren’t indexed.’
Im not sure what this means. So if you are 59 or 61 , u are not affected? It say .. you turn age 60 and ends there
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No to consumerism, Living a simple life, enjoying the experience - not the material stuff
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05-25-2020, 03:26 PM
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#4
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Recycles dryer sheets
Join Date: May 2015
Location: Someplace Warm
Posts: 429
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Also born in 1960 - may have to have a serious word with my parents why they picked that year However, in the Bogleheads discussion, one can also find the following quote:
"The National Average Salary (or the National Average Wage) is the mean salary for the working population of a nation. It is calculated by summing all the annual salaries of all persons in work and dividing the total by the number of workers."
(Boldface by me). If that is the case, there may be at least some hope if the unemployed are not counted in the number of workers, at least for the time during which they were without work. This would be the reasonable way to count such an average - but of course you can't count on "reasonable" for anything coming out of Washington... But if the average is indeed calculated in this "reasonable" way, the situation may not be quite so dire, since those that didn't lose jobs may not have seen their salaries drop much on average, so the effect would be much smaller.
It seems we would need to have somebody study the details of the law or the SS regulation; I am not quite sure where to look myself, but perhaps others here have an idea?
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05-25-2020, 03:31 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: The Beautiful Blue Ridge Mountains
Posts: 2,778
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I was born in 1960 and DW starts Medicare this year. Double whammy.
We’re still not going back to w*rk.
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05-25-2020, 03:35 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,197
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Quote:
Originally Posted by cyber888
‘The indexing takes place for the year you turn age 60 and ends there. Those born in 1960 reach their 60th birthdays in 2020. Earnings after age 60 aren’t indexed.’
Im not sure what this means. So if you are 59 or 61 , u are not affected? It say .. you turn age 60 and ends there
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All your prior earnings are reindexed to a formula using wage earnings at 60 years old. This is part of the formula used to payout future SS along with cola increases which is separate.
Thus if there are large wage decreases this year, one's future payouts will be decreased if one turns 60 this year.
It is more involved, but this is a start.
I know from other posts that @Perryinva understands these concepts quite well.
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TGIM
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05-25-2020, 04:25 PM
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#7
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Recycles dryer sheets
Join Date: Aug 2014
Posts: 132
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Isn't that awesome. Yep, born in 1960. Certainly not the best news I've received today.
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It's not what you earn. It's how you spend it.
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05-25-2020, 04:51 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Sep 2013
Location: Ventura County
Posts: 1,431
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On the plus side, the tax torpedo I was anticipating in 10 years just got significantly less severe...
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05-25-2020, 04:55 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,863
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Quote:
Originally Posted by stepford
On the plus side, the tax torpedo I was anticipating in 10 years just got significantly less severe...
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Probably 12 years now. RMD age raised to 72 by recent law.
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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05-25-2020, 05:19 PM
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#10
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Moderator
Join Date: Jul 2017
Posts: 5,598
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Ouch!
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Use it up, wear it out, make it do or do without.
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05-25-2020, 05:24 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 1,691
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Does unemployment affect wage index, I would think average wage index would be an average of people who are working as mentioned, but what about someone who was working part of the year?
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05-25-2020, 05:25 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Posts: 1,778
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I was born in 1961. Retired last year. Will this affect me?
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05-25-2020, 05:37 PM
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#13
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Recycles dryer sheets
Join Date: May 2015
Location: Someplace Warm
Posts: 429
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Quote:
Originally Posted by teejayevans
Does unemployment affect wage index, I would think average wage index would be an average of people who are working as mentioned, but what about someone who was working part of the year?
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That is one of the big questions. If done by common sense (which is of course not a given with the SS Administration), they would somehow prorate by months employed or something like that.
However, depending on the specifics, there is a possibility of even the opposite effect: considering the unemployed are predominantly lower wage service type jobs, if they are not counted in the calculation, then it's quite possible the average over all employed would even go up. So this needs to be researched in detail.
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05-25-2020, 05:37 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,197
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Quote:
Originally Posted by ER Eddie
I was born in 1961. Retired last year. Will this affect me?
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Only folks that were born in 1960, unless the economic fallout affecting the downward movement of average wages continues into next year.
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TGIM
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05-25-2020, 06:53 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Coronado
Posts: 3,655
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Quote:
Originally Posted by teejayevans
Does unemployment affect wage index, I would think average wage index would be an average of people who are working as mentioned, but what about someone who was working part of the year?
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Here is some historical info on how AWI has been calculated over time: https://www.ssa.gov/OACT/NOTES/note133.html
And the specifics for 2018: https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2018
From a quick skim, it appears that the salary data is the sum of box 3 on all W-2s and the divisor is the number of W-2s. A W-2 cannot tell you how many months someone was employed during the year, and it does not include unemployment compensation received, so those things cannot be taken into account.
With a quarter to a third of the workforce unemployed for several months, and many companies cutting pay across the board, I don't see how this number cannot go down, even if people on the lower end get extra overtime hours and hazard pay.
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05-25-2020, 07:05 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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I’m confused. But 1959 was OK I guess.
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Retired since summer 1999.
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05-25-2020, 08:55 PM
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#17
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Full time employment: Posting here.
Join Date: Jul 2014
Posts: 859
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Quote:
Originally Posted by audreyh1
I’m confused. But 1959 was OK I guess.
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See the Bogleheads thread linked earlier for more details - unless that thread itself is what caused the confusion.
Yes, a 1959 b'day is unaffected.
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05-25-2020, 09:27 PM
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#18
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Recycles dryer sheets
Join Date: Mar 2017
Location: Mid Town
Posts: 119
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not cool. Hope they address this somehow.
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05-25-2020, 09:34 PM
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#19
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Recycles dryer sheets
Join Date: Jul 2011
Posts: 425
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Quote:
Originally Posted by GalaxyBoy
I was born in 1960 and DW starts Medicare this year. Double whammy.
We’re still not going back to w*rk.
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Me too on both (I was born in 1960 and DW is going on Medicare this fall, as she is 5 years older than I). It's bad enough interest rates are effectively 0 right now and now this!
Not going back to work either, as we still have enough funds. A third of it is in cash, thus my displeasure with the current low interest rate environment.
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05-25-2020, 10:00 PM
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#20
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Recycles dryer sheets
Join Date: Feb 2017
Location: Weatherford Texas
Posts: 456
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I am a 1960 model too. This is just great.
I am assume we have people on this message board that turned 60 during the worst of the 2008-2009 downturn. Any testimonials on how their social security was impacted?
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Retired June 1, 2018
RE AA 65/35
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