Born in 1960? Expect a Big Social Security Cut

[CaptTom]

By all means, keep us posted and let us know if there's anything we can do.

The way I read it, R's would face a strong backlash for doing anything that smacks of bipartisanship. I don't know how we'd break that barrier. Especially if the D's load the bill up with unrelated stuff. Too bad they can't all look out for their constituents, instead of their parties.

[Focus]

Quote:

Originally Posted by ERObjd I will be writing to my rep on Monday yes as luck would have it I was born in 1960.

Good luck with that. I wrote my two senators and representative, and I linked to specifics. Only two got back to me with long boilerplate responses along the lines of "I'm a big supporter of Social Security." When I tried to get them to respond to the issue at hand, crickets.

[Leo1277]

When this topic first came up on this forum, I followed the suggestion to contact my senators and representatives, and took the liberty of pleading the case both in my northern and my southern state. Today, many months later when I had already given up on hearing from anyone, I got the following email:

Quote:

Dear [...], Thank you for contacting me about the impact of the pandemic on the Social Security benefits of people who turned 60 in 2020. I agree with you that we must protect Social Security, one of America’s most successful programs, for those receiving it now and in the future. As a result of the COVID-19 pandemic, the Average Wage Index (AWI) will most likely decrease for 2020, which will lower lifetime Social Security benefits for the more than 4 million retired workers who turned 60 in 2020. I strongly support the Protecting Benefits for Retirees Act, which would instruct the Social Security Administration to calculate benefits with a flat AWI if the AWI measurement would otherwise be less than the preceding year. I am committed to protecting Social Security, which is why I am a member of both the Expand Social Security and the Senate Defending Social Security Caucuses. As member of the Senate Finance Committee, I will continue to fight to ensure fair benefits and protect retirement security of all Americans. Thank you again for contacting me. Please continue to keep me informed about issues of importance to you and your family. Sincerely, Debbie Stabenow United States Senator

Looking up the name of the Senate act, the "Protecting Benefits for Retirees Act", which is S.4180 introduced during the last congress, I found this link where one may be able to follow its progress, for what it's worth: https://www.congress.gov/bill/116th-congress/senate-bill/4180 Looking in the list of co-sponsors, one finds Sen. Cassidy, Bill [R-LA]*, so this may be a sign for fledgling bi-partisan support.

[Dtail]

Quote:

Originally Posted by Leo1277 When this topic first came up on this forum, I followed the suggestion to contact my senators and representatives, and took the liberty of pleading the case both in my northern and my southern state. Today, many months later when I had already given up on hearing from anyone, I got the following email: Looking up the name of the Senate act, the "Protecting Benefits for Retirees Act", which is S.4180 introduced during the last congress, I found this link where one may be able to follow its progress, for what it's worth: https://www.congress.gov/bill/116th-congress/senate-bill/4180 Looking in the list of co-sponsors, one finds Sen. Cassidy, Bill [R-LA]*, so this may be a sign for fledgling bi-partisan support.

So we would go from a current estimate of -0.5 to a flat zero. Somewhat better, although less than the typical 2+% increase.

[Leo1277]

Quote:

Originally Posted by Dtail So we would go from a current estimate of -0.5 to a flat zero. Somewhat better, although less than the typical 2+% increase.

I have not seen the detailed figures of this estimate of -0.5% that has been mentioned, but if you just look at the numbers of people actually on payroll after Covid started versus before, and that many of those who kept their employment got salary and wage cuts, that drop in AWI appears to be much larger than that. About the actual bill, I would still think the sensible thing would be to tie the minimum AWI increase to some CPI, for example just to what's used for the annual social security increases. Oh well.

[Dtail]

Quote:

Originally Posted by Leo1277 I have not seen the detailed figures of this estimate of -0.5% that has been mentioned, but if you just look at the numbers of people actually on payroll after Covid started versus before, and that many of those who kept their employment got salary and wage cuts, that drop in AWI appears to be much larger than that. About the actual bill, I would still think the sensible thing would be to tie the minimum AWI increase to some CPI, for example just to what's used for the annual social security increases. Oh well.

That is a logical substitute.

[rrppve]

While CPI might be a logical substitute, the no downward adjustment seems to be much more likely. Of course, CPI is still used to adjust the annual payment amounts. The other systemic fix would be to use an average of say the highest 3 years AWI.
I’ve been told that the actual AWI won’t be released until October. I’m trying to find some independent economists who might have an estimate of it. Please let me know if you have any economist friends who might be able to address this. Remember this affects lifetime income for 4 million of us.

[rrppve]

The AWI is out for 2020. Fortunately those of us born in 1960 did not actually get screwed. The AWI increased 2.83%
Surprised how much the estimates changed over the course of the year.

https://www.ssa.gov/oact/COLA/AWI.html

[ceciledian]

Quote:

Originally Posted by rrppve The AWI is out for 2020. Fortunately those of us born in 1960 did not actually get screwed. The AWI increased 2.83% Surprised how much the estimates changed over the course of the year. https://www.ssa.gov/oact/COLA/AWI.html

Awesome! Happy not to take a hit.

[Cobra9777]

Quote:

Originally Posted by rrppve The AWI is out for 2020. Fortunately those of us born in 1960 did not actually get screwed. The AWI increased 2.83% Surprised how much the estimates changed over the course of the year. https://www.ssa.gov/oact/COLA/AWI.html

Thanks for posting that. I had been wondering where this landed, as DW was born in 1960. I was born in 1961. I wonder if all the wage inflation in 2021 will work to my benefit. I seem to recall seeing a forecast for AWI at over 6% for 2021. But honestly I don't really follow this stuff very closely and I can't imagine it makes a material difference in our financial situation either way.

[skyking1]

Now if they would just address the 2034 haircut, but I know that will wait till 2033 and 3/4s

[Dtail]

Quote:

Originally Posted by rrppve The AWI is out for 2020. Fortunately those of us born in 1960 did not actually get screwed. The AWI increased 2.83% Surprised how much the estimates changed over the course of the year. https://www.ssa.gov/oact/COLA/AWI.html

Good to know, as I am one of those 1960ers.
Inflation can be good if short term for long term gains.

[11522914]

Quote:

Originally Posted by rrppve The AWI is out for 2020. Fortunately those of us born in 1960 did not actually get screwed. The AWI increased 2.83% Surprised how much the estimates changed over the course of the year. https://www.ssa.gov/oact/COLA/AWI.html

Thank you for posting this

[Palmtree]

Another thanks here. As a 1960'er myself, I thought for sure we were all going to get screwed. Glad it's not so.

[teejayevans]

Quote:

Originally Posted by Palmtree Another thanks here. As a 1960'er myself, I thought for sure we were all going to get screwed. Glad it's not so.

Well, we didn’t get the higher COLA, so should not do this:

[CaptTom]

2.83% doesn't seem all that great, given all the noise I'm hearing (and seeing in the stores and gas stations) about inflation.

Or is the a better perspective I should be looking at this from?

[Cobra9777]

Quote:

Originally Posted by CaptTom 2.83% doesn't seem all that great, given all the noise I'm hearing (and seeing in the stores and gas stations) about inflation. Or is the a better perspective I should be looking at this from?

That's a 2021 story. Last AWI forecast I saw was over 6% for 2021, which should be good for those of us born in 1961.

2.83% is a great number for 2020 considering everything that happened, especially in the first half of the year. I guess there was enough employment recovery in the 2nd half to average-out to a decent number.

[Svensk Anga]

Quote:

Originally Posted by CaptTom 2.83% doesn't seem all that great, given all the noise I'm hearing (and seeing in the stores and gas stations) about inflation. Or is the a better perspective I should be looking at this from?

For those born in 1960 (or later), the 2.83% rise inflates your whole earnings history up to the wage level prevailing in 2020. 2.83% looks pretty fair compared to the last 35 years of inflation. (Only your highest 35 years count for SS and for most that would be their last 35 years.) Inflation from end of 1985 to end of 2020 was 2.52%, so the AWI increase allows for just a bit of real wage growth. It does an even better job of inflating one's earnings history from the last decade or two, when inflation ran lower. Each year is inflated individually before taking the average when SS calculates your average wage.

SS will calculate your benefit based on the wage index for the year you turn 60, so 2020 for those born in 1960. After that, they annually inflate your benefit by the CPI-W. So all those born in 1960 or earlier will eventually get this year's 5.92% inflation adjustment.

[Dtail]

Quote:

Originally Posted by Svensk Anga For those born in 1960 (or later), the 2.83% rise inflates your whole earnings history up to the wage level prevailing in 2020. 2.83% looks pretty fair compared to the last 35 years of inflation. (Only your highest 35 years count for SS and for most that would be their last 35 years.) Inflation from end of 1985 to end of 2020 was 2.52%, so the AWI increase allows for just a bit of real wage growth. It does an even better job of inflating one's earnings history from the last decade or two, when inflation ran lower. Each year is inflated individually before taking the average when SS calculates your average wage. SS will calculate your benefit based on the wage index for the year you turn 60, so 2020 for those born in 1960. After that, they annually inflate your benefit by the CPI-W. So all those born in 1960 or earlier will eventually get this year's 5.92% inflation adjustment.

Great explanation.
The key point is that for those born in 1960, all the previous historical earning years (35) are adjusted by the 2.83%.
The concern was that this number was looking to be a negative number due to the Covid situation and if it was negative, then the 1960ers would effectively take a lifetime hit to their SS.

So not as good as the 5.9%, but good enough in the most important calculation year for those born in 1960.