There is a group of very old people out there who, for decades now, has been misled into believing that they are being cheated out of Social Security benefits. I’m talking about folks who are now pushing the century mark — in their mid-to-late 90s and beyond. And that means that for 30 or 40 years now, they have been carrying a grudge against the government in general, and Social Security in particular. I still get letters from these people. Or, more often lately, I get letters from their sons or daughters (who themselves are now in their late 60s or 70s) asking me if anything can be done about this perceived injustice — the infamous “Social Security notch.”
In fact, my own mother was one of those people. Despite my constant reassurances to the contrary, she was convinced that the government was ripping her off by short-changing her on her monthly Social Security check.
This cohort of seniors, generally people born between 1917 and about 1926, called themselves the “notch babies.” And their false claims about getting financially fleeced by Uncle Sam were fueled by a rather sophisticated, albeit deceitful and shameful lobbying campaign, sponsored by greedy gadflies out to make a quick buck.
For those readers who don’t have a clue what I am talking about, the “notch” refers to a time period when corrections were made to the Social Security benefit formula — corrections that were necessary to ensure that all Social Security recipients were paid properly, but corrections that were misconstrued by many to be a way of cheating them out of benefits they felt they were due.
Here’s the story.
In 1972, Congress passed a law mandating automatic annual cost-of-living adjustments to Social Security checks. Those COLAs were to be based on increases in the government’s official inflation measuring stick: the consumer price index. (Before 1972, COLAs were not automatic. They were sporadic and happened only if Congress specifically authorized a yearly increase.)
As part of the new process, the Social Security Administration had to come up with a formula for calculating increases to people’s Social Security checks — which they did. But after COLAs were paid for a couple of years, someone noticed the formula was wrong. Social Security beneficiaries were getting increases that were slightly higher than intended.
Once the mistake was discovered and SSA notified Congress, several decisions had to be made. For one, they had to figure out what to do about all of the Social Security beneficiaries who received the overly generous COLA adjustments. Congress decided to let them keep the money. (It would have been political suicide to send “overpayment” letters to every senior citizen in the country.)
The second choice Congress had to make was to decide where to draw the line — which people would have their benefits figured using the proper COLA formula. And they drew that line at 1917. In other words, they said everyone born in 1917 and later would have his or her Social Security benefit figured using the corrected formula.
Sounds simple enough, doesn’t it? But sometimes Congress can’t leave well enough alone. In this case, they bowed to pressure from senior citizen groups who demanded a transition period from the old (incorrect) formula to the new (proper) formula. After lots of haggling, what they eventually decided was that everyone born between 1917 and 1921 would have his or her benefit figured using a special formula.
So, we ended up with the following scenarios. People born after 1921 had their benefits figured using the proper (and lower) COLA formula. People born before 1917 had their benefits figured using the incorrect (and higher) formula. And people born between 1917 and 1921 had their benefits figured with a special formula not quite as generous as the one used for the pre-1917 crowd but more generous than the one used for the post-1921 crowd.
You’d think everyone would be happy, right? Well, what happened next was pretty bizarre. Social Security recipients born in 1917 and later started to complain that they weren’t getting quite as much as folks born 1916 and earlier. Someone should have splashed some cold water in their faces and said, “You are being paid correctly. It’s the folks born before 1917 who are getting overly generous benefits. And on top of that, you are getting Social Security benefits at a higher rate than anyone born from 1922 on.”
Instead, mobs of angry senior citizens around the country started to form into groups demanding “justice.” Even Ann Landers got into the fray. She’s the one who came up with the moniker: “notch babies.” And all these folks mistakenly thought they were singled out for lower benefit adjustments than everyone else. To repeat the facts: They were getting slightly lower benefits than people born 1916 and earlier, but they were getting higher benefits than everyone born after 1921.
Then those greedy lobbying groups I mentioned earlier got into the mix and really muddied things. They sent letters to folks born in the so-called “notch years,” telling them they were being cheated out of Social Security benefits and asking for donations to “fight this injustice.” And to help fill their coffers even more, the lobbyists deceitfully expanded the definition of those notch years to include everyone born through 1926. Some inexplicably pushed the notch cutoff into the 1930s! So senior citizens of all ages started sending in tens of millions of dollars — money that paid for many overpriced lobbyists and some pretty nice office space on K Street in Washington, D.C. — but money that accomplished nothing else. After all, there really was no “injustice” to fight.
Sadly, millions of seniors born between 1917 and 1926 or even later went to their graves bitter and disappointed — including my own mother! Those alive today still believe that they are being cheated out of Social Security benefits. If you know one of these people, please tell them to enjoy what time they have left on earth and stop fretting about an alleged injustice that never happened.