Born in 1960? Expect a Big Social Security Cut

[SpinDoctorTX]

Wow... I used to think that being a decade kid was kinda cool. Maybe not so much. I need to look into this further.

[LastBoomer]

Talk to your Representative. The fixes required to SS are so minimal, but no elected official has the political will to deal with it. Term limits would fix that.

[zippy2020]

Wow, this was a very interesting discussion (and thanks to those who posted explanations - numbers give me a headache, LOL)!

I had no idea this AWI even existed. Just depended on my annual mailed statement all those working years, and figured it would be sorta/kinda around the numbers listed.

Ah, the things you never learn in school......

I'm an older Boomer so it seems I lucked out. From the SocSec AWI chart:

2013 44,888.16 - would have been the first year I was eligible (62). We didn't need the money so I delayed taking it.
2014 46,481.52
2015 48,098.63
2016 48,642.15
2017 50,321.89
2018 52,145.80 - I filed in February, mostly on impulse, age 66 yrs 8 mos.

If I had waited until I was 70, as so many experts recommend, that would mean I would have filed in.....Spring 2021. Yikes!

[Gumby]

As I understand the earlier posts, the only AWI that matters is the year you turn 60, which for you would have been 2011.

[carty1]

Wonder how/if any this affects Railroad Retirement?

[Perryinva]

It doesn’t. And only the year you turn 60 matters. All subsequent AWIs mean nothing. Previous to age 60 AWIs were only used for estimating, as they established the bend points and max AIME levels. It’s somewhat important to remember what the AWI is used for. It is used to index your top 35 years SS earnings against the age 60 AWI. The biggest % effect would be on people that have 35 years of maxed SS earnings that occurred before they turned 60, the more time before 60, the worse. The least effect would be on people that had max earnings over say the last 10 years, and much lower earnings all previous years. The multipliers are fairly small for the last 10 years, as the AWI has increased fairly small percentages as of late. In the late 70’s through the ‘80s the gains were much larger, so if all your max earnings were then, the hit is larger than recent years where they were 1.xx. Sadly, 2020 was predicted to be one of the highest gains in quite a while. Of course, no one has seen their results of those estimates, so it is pretty tough to tell exactly how much you “lost” unless you do it manually based on predictive AWI. The SSA USED to publish the manual calculation chart every January with the bend points and multipliers already filled in. All you had to do was fill in your earnings and you got the FRA PIA. They stopped publishing that chart for anyone that turned 60 in 2017 and later.

[Svensk Anga]

I wonder how the lockdowns will affect the kids who normally get summer jobs. If that is substantially diminished, it could keep a lot of very low W2’s out of the average. Maybe it won’t turn out that bad.

I’m watching because DW is a 1960 model. I’m a ‘59. We can’t be hurt too badly though because pre-Covid her benefit was running right near half of mine. Worst case she gets spousal instead of her own. Can’t get delayed retirement credits on spousal though.

Regarding the proposal up-thread about changing from wage indexing to CPI prior to FRA, be careful what you wish for. The reason that SS is indexed to AWI is that AWI grows faster (usually), than CPI, reflecting a generally rising standard of living. AWI indexing was intended to keep folks up with the prevailing standard of living. Without that one would have fallen behind about 2%/year. Wholesale rework of the formula would be a convenient way to sneak in a benefit cut. It could be stealthy too, where the immediate cut is nil, but it grows year by year. Actually, that sounds like a politically feasible way to move the system toward long term solvency.

[rrppve]

Since I’m in the 1960 cohort, along with my HS and college classmates, I’d like to figure out a way to advocate for a change in DC to address this issue, either ad how or permanent. My congressional representative’s staffer on social security is aware of the issue. I also forwarded the UPenn working paper to the staff, and will probably have a call with them next week.
Anyone have any legislative lobbying experience or particular insight that they would like to lend to an advocacy effort? Please PM me.

[CaptTom]

Yes, we need a lobby.

It would really suck to get screwed out of a (remaining) lifetime of SS over this one blip. The problem with our system is that "majority rules." Anyone born in one specific year is in a very small minority. Probably not enough to affect any elections.

What's worse, my friend born a couple of months before me in 1959, whom I always tease about being older, is going to get the last laugh.

[oldphd]

Quote:

Originally Posted by CaptTom What's worse, my friend born a couple of months before me in 1959, whom I always tease about being older, is going to get the last laugh.

So it's your fault! Bad karma...

From a fellow 1960er...

[Dash man]

Quote:

Originally Posted by oldphd So it's your fault! Bad karma... From a fellow 1960er...

My poor sister in law was born in 1960. She never gets a break.

[doxiemama]

Well great! Child of 1960 here, first COVID-19, massive unemployment, rioting, and now this. Already gave up a trip to Hawaii and was laid off from my "retirement" part-time job. Although the government unemployment thru July is a windfall for part-time workers. Making double and saving every penny of it!

Have a government pension and savings but wanted to work part-time till 65. Well forget that! Now will file at age 62. How many of us out there doing that? Claiming early due to massive loss of jobs.

Oh well life changes! A bigger concern of mine is the 25 million or so that are still unemployed (down from 40 million) are no longer paying into ss. I know the President talks about a payroll tax, meaning less going into ss from employer and employee.

If my future checks drop by a small amount that does not worry me as much as the fact the the funding into the system has tanked and will continue to be low until we go back to full employment. How that will impact our benefits in the future That worries me more. In my family the average age of death for females is 92 and a Aunt just died at age 103 from COVID-19. Probably would have made it to 105!

Any more good news out there to share with the 1960 babies?

[RetireBy90]

Quote:

Originally Posted by rrppve Anyone have any legislative lobbying experience or particular insight that they would like to lend to an advocacy effort? Please PM me.

I would think AARP might be an effective advocate for this as they already have plenty of influence with the boys and girls in DC.

[Texas Proud]

Have not gone through all the posts...



But from some of the news I have seen recently the avg wage is going UP... now, I do not know how this affects the number used by SS...


The explanation is that the white collar are still working and the blue are the ones that are not... so low wages drop off, avg goes up...

[Time2]

Quote:

Originally Posted by Leo1277 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?

I suspect if you get a W2, you would be counted as working. Most stay at home orders were after March 15, so that's 2-1/2 months plus what ever work happens near the end of the year.

[RunningBum]

So there's a shortfall which is very likely to affect paying full SS benefits around 2034. No politician seems to want to do anything to address that, especially cutting benefits now.

There's a bad year (or maybe a few) where a lower AWI will reduce benefits to sum. I don't know just how much or how little it'll affect the 2034 shortfall, but it's gotta help some. All politicians have to do is let it go...do nothing.

I'm not sure why a group of politicians would step up to make the 2034 scenario more likely to happen. Sorry, 1960ers. I'm 1961 so I kind of expect us to get hit as well.

[Time2]

This page has number of workers and workers (x 1000) and income
(x 10^6) and it calculates out to average amount for the current year.
Then there is an increase, that is 'added on to your AWI. The 'add on' comes from the increase from the previous year.
I was born in 1955, 2015 was a good year. My wife's year is 2019, not on the chart yet.


https://www.ssa.gov/oact/cola/awidevelop.html


OR Maybe we have it all wrong.


https://www.ssa.gov/oact/cola/AWI.html#Series


When indexing an individual's earnings for benefit computation purposes, we must first determine the year of first eligibility for benefits. For retirement, eligibility is at age 62. If a person reaches age 62 in 2020, for example, then 2020 is the person's year of eligibility. We always index an individual's earnings to the average wage level two years prior to the year of first eligibility. Thus, for a person retiring at age 62 in 2020, we would index the person's earnings to the average wage index for 2018, or 52,145.80. We would multiply earnings in a year before 2018 by the ratio of 52,145.80 to the average wage index for that year; we would take earnings in 2018 or later at face value. (See two examples of indexed earnings.)

[djsander]

I contacted my congressman on this subject with an explanation. I received a canned email response that didn’t address my concerns and only addressed working to preserve social security and Medicare and working to eliminate fraud and abuse. Basically he ignored me. I responded back and let him know he didn’t address my concerns and would let all my friends and coworkers know he doesn’t care one bit about his constituents. I waiting to see if I get another reply. I’m a 1960 person and will be following this one closely. Printed out my estimated benefits and will see what happens. I’ll report back in November or so when the system is updated. My guess is the do nothing politicians won’t care unless it has a big affect on their electability.

[Time2]

Quote:

Originally Posted by djsander I contacted my congressman on this subject with an explanation. I received a canned email response that didn’t address my concerns and only addressed working to preserve social security and Medicare and working to eliminate fraud and abuse. Basically he ignored me. I responded back and let him know he didn’t address my concerns and would let all my friends and coworkers know he doesn’t care one bit about his constituents. I waiting to see if I get another reply. I’m a 1960 person and will be following this one closely. Printed out my estimated benefits and will see what happens. I’ll report back in November or so when the system is updated. My guess is the do nothing politicians won’t care unless it has a big affect on their electability.

Read this and see if it really affects you.

https://www.ssa.gov/oact/cola/AWI.html#Series
Note where it says 62 not 60.

[gwraigty]

Quote:

Originally Posted by djsander I contacted my congressman on this subject with an explanation. I received a canned email response that didn’t address my concerns

I'm not defending him, but based on an experience I had several years ago, your congressman may not be aware you made contact. The interns/office staff screen stuff and only pass on what they think is important. The staff probably don't read any emails/messages thoroughly enough to determine it's not just another constituent demanding they do something to fix the impending SS shortfall, which they've heard a thousand times already.