Notch Bulletin: November 2010

Notch Bulletin: November 2010

Recently we received the following from one of our readers that vividly illustrates the Notch disparity:

I never realized how the Notch affected me until last week, when I learned that one of my neighbors (who is 94 and a naturalized citizen) is receiving almost $2,000 a month in Social Security.  From 1952 until I retired in 1989 at the age of 67, I paid the maximum in payroll taxes.  I’m currently receiving a little over $1,500 a month from Social Security — $500 a month less than he is getting!

The difference in benefits you cite from the neighbor who was born just one year prior to the start of the Notch years is indeed large — all the more so, because you were born six years later and delayed retirement two years after your full retirement age.  Under normal circumstances, both the difference in your age, and the delay in starting benefits should have meant that your benefit would have been higher or at the very least, similar to that of your neighbor who was born in 1916.   But the benefit disparities experienced by Notch Babies were much larger for people who delayed retirement, particularly workers like you who not only paid the maximum in taxes, but paid over more years as they worked past their full retirement age.

In 1988 the Government Accounting Office, now the Government Accountability Office, released a comprehensive report on the Notch detailing benefit formula changes that led to the lower benefits received by many Notch Babies.  Among other things, for example, the number of years of earnings used in computing the initial retirement benefit was lengthening, there were changes made to mathematical calculations, and earnings after age 62 were not as advantageous as they were for your neighbor.

The size alone of your benefit disparity is just one example why TSCL maintains that The Notch Fairness Act is a very modest settlement.  Passage of The Notch Fairness Act, which would provide Notch Babies born from 1917 through 1926 a choice of $5,000 payable in four annual installments or a higher monthly benefit, would bring an end to the long-sought effort for Notch reform that arose the last time Congress enacted changes to the Social Security benefit formula.  We agree with you and so many other Notch Babies who have told us, that $5,000 in no way replaces the lower benefits you received over your retirement lifetime.

As of October 4, 2010, 113 Members of the House share our belief that the disparity in benefits should be settled and have signed on as co-sponsors to The Notch Fairness Act (H.R. 1067), introduced by Representative Ralph Hall (TX).  In addition, a companion bill (S. 81) in the Senate was introduced by Senator David Vitter (LA).  We continue to push for enactment in the final days of 2010.