Persons born in 1960 do not earn less in social security

Experts warned that if the economy had not recovered from the pandemic in 2020, people born in 1960 could face a lifelong benefit cut.

social insurance was founded in 1935 to pay employees an ongoing income after retirement. Currently, one in five Americans receives a Social Security benefit from the US Social Security Administration.

In 2022, millions of Americans who turned 62 became eligible to receive Social Security benefits. VERIFY viewer Kevin recently emailed our team about claims that suggest people born in 1960 may face a permanent cut in their Social Security benefits. This speculation was far reported in 2020 and 2021.

“Will people born in 1960 earn less on Social Security because of some quirk in the payment formula?” Kevin asked.


Will people born in 1960 earn fewer Social Security benefits because of a quirk in the payment formula?



That's wrong.

No, people born in 1960 do not earn fewer Social Security benefits due to a quirk in the payment formula. If the pandemic had caused average wages to fall in 2020, Social Security benefits would have been adjusted downward as well. However, wages have actually increased in 2020.


If there is a severe economic downturn, it may adversely affect Social Security benefits for some recipients born in a particular year. This is rare, but it has happened before – in 2009, during the Great Recession, when wages fell 1.5 percent. This means that people born in 1949 (and turning 60 in 2009) will receive fewer Social Security benefits for the rest of their lives than people born in other years.

Some analyst expects that the negative economic impact of the onset of the coronavirus pandemic in 2020 could have a similar impact on Social Security recipients born in 1960.

Social Security Benefits are usually calculated using the average indexed monthly income (AIME). This average is calculated according to data from the Social Security Administration and using up to 35 years of a worker’s highest earnings adjusted for economic changes over time AARP. The Social Security Administration applies a formula to this average to calculate the Primary Insurance Amount (PIA), which is the basis for the benefits paid to an individual.

The formula used to calculate the PIA reflects changes in overall wage levels as measured by the State Average Wage Index (AWI)used by the Social Security Administration to track wage growth among American workers as a measure of inflation.

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If a person turns 60, two years before they are entitled to benefits, the federal government examines their entire annual income. The Social Security Administration adjusts wage inflation each year based on the average income growth rate for all Americans, according to the AWI. This ensures that the calculations reflect changes in the cost of living over time.

In a July 2020 Transcript before a congressional subcommittee, Stephen C. Goss, chief actuary for the Social Security Administration, warned that people born in 1960 faced a nearly 10 percent cut in their Social Security benefits because of the way the AWI is calculated.

“In an economic recession, when many workers may be working less than full year, AWI tends to increase less than in a typical year and may even decrease,” Goss said.

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Fortunately, the economy recovered faster than Goss originally forecast. As a matter of fact, Wages in 2020 have actually increased by nearly 3 percent, meaning people born in 1960 (who became eligible in 2022) won’t face a permanent cut in their Social Security benefits.

“The Social Security Administration recently released the Average Wage Index, applicable for 2020, used to calculate benefits for those born in 1960. The index rose 2.8% from 2019 to 2020 – very good news for those born in 1960.” Mary Johnson, Social Security and Medicare Policy Analyst for The Senior Citizens League, wrote in a December 2021 newsletter.

Some groups have called on Congress to intervene if wages are adjusted downward again. The legislature rejected this in 2009. But in 2020 the legislation was there introduced in the house and senate attempting to prevent an unintended decline in Social Security benefits in the future. No bill was put to the vote.

More from VERIFY: Yes, the Social Security cost-of-living adjustment for 2023 is expected to be above average

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Laura Coffey

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