The next COVID-19 relief bill should fix an unintended benefit “notch”
under which, due to the pandemic and resulting recession, Social
Security benefits will be significantly lower for workers who turn 60
this year and will be eligible for early retirement benefits in 2022.
Those becoming eligible for disability or young survivors benefits in
2022 will also see lower benefits. ...
Normally, average earnings in the economy rise from one year to the
next. Due to the sudden, sharp unemployment increase in 2020, however,
many workers will suffer a big decrease in their annual earnings. And
those decreases will cause the economy-wide average annual wage to fall
as well. That, in turn, will reduce the average indexed earnings and
Social Security benefits of workers turning 60 in 2020 compared to those
with similar earnings who turned 60 in 2019. If the average wage falls
by 5 percent in 2020, as now seems likely, the retirement benefit of a
60-year-old worker with average earnings will drop by about $1,200 a
year for each and every year of retirement. If the average wage falls
more, the decreases will be even larger. ...
Policymakers should fix this unfair result. One solution would be to
specify that the wage-indexing factor couldn’t fall from one year to the
next, even when the average wage index declines. ...
No comments:
Post a Comment