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Bipartisan Bill Offers Fix For “COVID-19 Notch” Issue Affecting Those Born in 1960
Much has been written recently about how Social Security benefits for those turning 60 this year will be hurt due to the COVID-19 pandemic. Often referred to as being in the “pandemic notch,” those born in 1960 and who turn 60 in 2020 face a hit to their future Social Security benefits because of a potentially negative national Average Wage Index (AWI) for this year. Each person’s Social Security “primary insurance amount” (PIA) is initially computed at age 62 when they are first eligible for benefits. But to compute that benefit, Social Security uses AWI data from 2 years prior to establish important base parameters known as “bend points,” which essentially raise basic benefit values from one year to the next. Due to the pandemic, it’s probable that the AWI for 2020 will be negative which, if the standard formula is used, would result in lower bend point values, and thus a lower PIA for those born in 1960.
In a welcome display of bipartisanship, Senator Tim Kaine (D-VA) and Senator Bill Cassidy (R-LA) have joined forces to propose the “Protecting Benefits for Retirees Act” which offer a legislative fix to the “pandemic notch” problem. The bill proposes to prevent the national average wage index (AWI) from going negative under any circumstance, thereby protecting those turning 60 this year from a cut in their future Social Security benefits due to COVID-19. Click here to read Senator Kaine’s announcement touting the proposed legislation.
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