Two social security cuts if you were born in 1960

[CousinIT]

Last edited Mon Jul 20, 2020, 09:05 AM - Edit history (1)

If you were born in 1960, you're subject to TWO social security cuts:

1. The retirement age for you is 67, not 65. And your monthly benefits are lower than older retirees when they retired at 65.
2. Because of coronavirus, and the fact that your benefits when you retire are based partially on your wages at age 60 - in 2020 - when coronavirus has driven wages down

Add to this a potential third cut:

3. Donald Trump and Republicans are trying to force a massive social security funding cut into additional coronavirus relief legislation in the form of a corporate tax cut -- a 'tax holiday' which could be made permanent and consists of elimination of the employer portion of the FICA tax which funds social security & medicare - putting these programs' dedicated funding at risk.

Item number one above, you can't do anything about. But if you were born in 1960, you're subject to a cut in your benefits because of the virus, and item #2 is actionable. So is item #3

CALL YOUR LEGISLATORS and Urge Them to Stop this Benefit Cut and to vote AGAINST any legislation that cuts social security -- even temporarily - because Republicans will push to make any cuts permanent!

The coronavirus pandemic is having a negative impact on how Social Security benefits will be calculated for future retirees turning 60 this year. And unless Congress takes immediate action to repair an unintended glitch in the Social Security law, the average beneficiary will see a $1,400 annual decrease in their future benefits, which would be devastating. No American should be deprived tens of thousands of dollars in retirement income simply because they were born in the wrong year!

That's why we need to make our views heard today! Please pick up your phone right now and call the National Committee to Preserve Social Security & Medicare's toll-free Legislative Hotline at [phone]. The Hotline will connect you directly to your U.S. Representative: Please tell them: Congress must stop this benefit cut and provide a 2% temporary increase in benefits for everyone by passing the "Social Security COVID Correction and Equity Act" (H.R. 7499).

As you may know, Social Security benefits are calculated according to a formula that incorporates the average wage for the year that beneficiaries reach 60 years of age. Workers born in 1960 will have their benefits determined according to the average wage for 2020, which will be lower than usual due to the coronavirus crisis. The average beneficiary would take a $1,400 annual hit in their future Social Security benefits — and not just once, but for life.

In addition to repairing this sizeable "notch" in retirement income for this age group, H.R. 7499 would increase Social Security benefits across the board by 2%; increase the threshold to 125% of the poverty level for the special minimum benefit lifting more lifelong workers out of poverty; and reduce taxation on benefits for lower- and middle-income beneficiaries who are struggling to provide for themselves and their families.

Bottom line: Tomorrow's retirees will depend even more on Social Security than the current generation of seniors. And Representative John Larson's (CT-01) bill offers a commonsense fix to the Social Security law by sparing workers turning 60 this year from a painful and permanent benefit cut. With so much at stake, and things moving so quickly in Washington, please act right now! Call your U.S. Representative through our hotline at [phone] and tell them to fix the glitch in the Social Security law now! Conveying your opinions to your member of Congress, particularly when they're most attuned to their constituents' needs in this crucial election year, is an important step to fixing this problem and providing temporary income relief for all Social Security beneficiaries.

_ _ _ _ _

While you're on the phone, you can ask your congresscritter to vote AGAINST any COVID relief bill that cuts FICA taxes -- even temporarily -- because Republicans will push to make the cut permanent, which is a HUGE cut to social security's dedicated funding. Tell them to vote FOR HR 7499 (John Larson's bill) and AGAINST any COVID relief that includes FICA tax cuts. Even temporary ones.

[CentralMass]

1. Thanks.I turned 60 in March

[More_Cowbell]

2. I turned 60 *and* lost my job in May.

Double whammy for me. No luck yet finding work. All because Trump couldn't be bothered to fight COVID (my employer fired 10% of employees).

[mr_lebowski]

3. Not that I'm born in 1960, but I don't understand #1?

I get the rest of it but why are people born in 1960 having their retirement age changed to 67?

Also is it "based partially on your wages at age 60", or is it based on average wages for workers overall, as suggested by this verbiage: "Social Security benefits are calculated according to a formula that incorporates the average wage for the year that beneficiaries reach 60 years of age"?

[pnwmom]

4. That had already happened. People born between 55 and 59 had the age for full retirement

increased upwards from 65 step by step -- till it reached 67 for people born in 1960.

Then, on top of that, many of them -- if they're experiencing a reduced income this year -- will have future benefits calculated based on this low income .

[mr_lebowski]

6. Okay, I understand on #1 now ...

But what about the other question?

It seems wildly unfair and arbitrary to base a significant amount of someone's ongoing benefits on their income in ONE year out of 50 or so years they paid into the system. What if you just happened to be laid off that year? You get totally screwed for the rest of your life, even if you made $120K every year except that one year?

If so that's pretty f-d up.

[pnwmom]

7. I agree. It stinks. nt

[dawg]

16. It's based on your 35 highest earning years.

Those may, or may not, include the year that you were 60 years old.

[mr_lebowski]

27. Thanks, that makes a lot more sense ... (nt)

[honest.abe]

25. It based on your top 35 earning years.. so if you have a really bad year you can replace it..

with a better year.. that is if you have 35 years of decent income.

[mr_lebowski]

26. That makes a lot more sense ... thank you!

[wnylib]

5. The change in the age of retitement is nothing new.

I was born in 1949 and have been getting SS retirement for 2 years now. The full retirement age for me was 67. That was changed from 65 many years ago.

[pnwmom]

8. Do you have a link for this information that could be shared elsewhere? n/t

[PoindexterOglethorpe]

9. This is highly misleading.

The increase in retirement age went into place decades ago.

It's also misleading to say the "retirement age" went from 65 to 67. What changed was the date at which you could collect "full Social Security" benefits. It's a bit more complicated than that. This is easy to check out at the Social Security website.

We've all always been able to start SS at age 62. The notion of "full retirement age" is a bit different. It's the age at which you can collect SS, continue to work, and not have your SS decreased. SS benefits max out at age 70, meaning if you choose to wait until that age, which a very small fraction of people do, which is dumb for most of them, you now collect the maximum benefit to you. It also means there's no point in not collecting at age 70, because your benefit will not increase any more, whether or not you continue to work.

People also need to understand that the SS payout is based on your 35 highest years of earnings. Not everyone actually works 35 years for lots of reasons, especially if you choose to start collecting SS at age 62.

Social Security benefits are calculated according to a formula that incorporates the average wage for the year that beneficiaries reach 60 years of age.

is simply not true, and I have no idea why this is stated.
For one thing, as I noted above, the benefit is based on your highest 35 years of earnings. That could possibly happen as early as age 55 or younger, or as late as age 70. Why this OP is using age 60 for the determination makes no sense at all.

I am 71 years old. I delayed collecting my own SS to age 70 because I understood very thoroughly how these things were figured.

I will recommend the book Get What's Yours: The Secrets to Maxing Out Your Social Security by Laurence Koltikoff, Philip Moeller, and Paul Solman. You absolutely want to read the updated version which covers recent changes in the law. It was in no small part that by reading that book I understood why I was best off delaying collecting my own SS, as well as the fact that I could collect against my ex, given that we'd been married more than ten years.

All of my life I have been listening to people saying "Social Security won't be around when I retire!" starting back when I was first in the work force over 50 years ago. Back then and now I'd say, "Bullshit!" It won't be around only if you agree not to let it be around.

[Sherman A1]

11. A good recommendation

I started collecting at 62 being shoved out of my job for the younger, cheaper employee that was a friend of one of the managers. I might have tried to stay to 65 but as the work was rather physical, I am happy now to be long gone from the place. Everyone’s situation and economics are different so the best we can do is be as informed as possible and apply that information to our own situation.

[PoindexterOglethorpe]

13. Right. And thank you.

I happen to feel that far more people should wait before collecting, but as you've pointed out, individual circumstances vary.

I do want to emphasize that the payout is completely dependent on your 35 highest years of earnings, and if you happen to not yet have worked 35 years, you might really want to reconsider.

Here's my own personal experience. I entered the workforce originally at age 17. I then worked for the next 17 years, although my rate of pay dropped precipitously the last two years. I then got married, and for the next 22 years earned almost no money. My marriage came to an end and I went back to work. The return to work made a huge difference in my Social Security payment. I added some 10 years to my earnings record. What a difference. My SS payout more than doubled. And by being able to delay taking it to age 70 it essentially tripled. Wow.

I will add that because I was divorced, after a marriage that lasted ten years, I was initially able to collect on my ex's account. Lucky me. When I switched to my own, at age 70, I got a few hundred dollars additional each month. If he dies, I get to be a widow and will again get a few hundred dollars more each month. Alas for me, his family tends to be very long lived, and I'm some five years older than he is. Oh, well. I am doing just fine as it is.

While I understand various fiscal realities, more people need to hang in there longer before collecting. In the long run it very much pays off.

I will say this. The people I have known who chose to collect at 62 have all come to regret it, because they soon realized that the payout that seemed so good at first was quickly no where near enough money to live on.

[Sherman A1]

14. Happily I had been planning ahead

My circumstances included both a 401 and a defined benefit pension. The house was nearly paid off and other expenses were minimal. I have been very happy to have the time without having to worry about the daily Mickey Mouse nonsense along with the physically draining part of the job. I didn’t like being shoved out the door, but it really allowed me to enjoy these last few years. My advice would be to go as soon as finances allow. Tomorrow is not guaranteed to any of us.

[Yeehah]

28. The system is designed so you get the same money either way.

Retire at 62 - you're collecting earlier but collecting for more years.

Retire at 67 - you're collecting more but collecting for less years.

[CousinIT]

17. "It won't be around only if you agree not to let it be around."

Agree on that. People need to watch these politicians like a hawk. Every minute. Every day. Because the Republicans and some Democrats are always trying to cut social security, FICA taxes (which are its sole dedicated funding stream), or whatever. Republicans have despised the program since it was created.

Calling your damn congresscritters every week or every time one of these changes or proposals comes up, is important. They can't be trusted and need to be watched. Ignoring all the things they want to do with people's social security is one way people "agree not to let it be around." Congress will just cut it, gut it, and do away with it if allowed by voters.

Don't assume they "can't do that", or "won't do that". They can and they will if voters don't raise a stink every time they come up with a hairbrained scheme to get their hands on our money.

The wording from what I posted came from an email I got from here (and I notice in this blurb they claim the loss from the low wages in 2020 due to coronavirus could be up to $2000/year for those who are 60 this year)

https://www.ncpssm.org/documents/news-releases/larson-bill-fixes-notch-boosts-social-security-during-covid-crisis/

[smirkymonkey]

10. K&R

[raccoon]

12. Thanks for posting this. Nt

[dawg]

15. Everyone born after that date has had the year they qualify for full benefits raised to 67.

That happened during the Reagan Administration.

Your Social Security check will be based on your 35 highest earning years. For many people, 2020 would have been a high earning year but now will not be. But that's probably not enough to move the needle much for most people.

[MineralMan]

18. Full retirement age changed long ago.

I was born in 1945, and my full retirement age was 66. My wife was born in 1956, and her full retirement age is 67. Those changes date back a long time. You may have just heard of them, but for those of us actually receiving SS benefits, it's nothing new.

[Victor_c3]

19. Does this impact people collecting SSDI?

I just turned 40 and I’ve been collecting SSDI for about 5 years now. Would any changes in the law impact what I’m currently drawing?

[Mariana]

22. Three are no changes to benefits being proposed at this time. nt.

[honest.abe]

21. Why are you focusing on a person born in 1960??

Everyone born 1955 and later is affected by the increase in full retirement age increase. Its incremental by 2 months each year beyond 1954.

Also the statement "Social Security benefits are calculated according to a formula that incorporates the average wage for the year that beneficiaries reach 60 years of age." is incorrect. The formula is based on your top 35 years of income. It doesn't matter what age you retire.

Its certainly important to call attention to proposed changes to Social Security especially from the GOP and Trump. They want to get rid of it or privatize it which is a recipe for disaster.

My hope is that if we take the WH and both chambers of Congress we can implement effective fair realistic changes that will benefit those who need it the most.

[CousinIT]

23. 2020 is part of the range in which benefits for those 60 this year are calculated from.

As for the later "full benefits" age (I called it retirement age), yes that was phased in. For those born in 1960 it is now 67, with 65 being "early" (least benefits), and 70 being the latest (most benefits)

[honest.abe]

24. Right but being 60 this year is nothing special or unique regarding social security issues.

Those 59 or 58 or younger are more negatively impacted.