National Committee endorses bill by Rep. John Larson to fix the notch in Social Security benefits for seniors

Rep. John Larson greets a constituent in Connecticut

The National Committee has endorsed a bill to avoid a significant drop in Social Security benefits for future retirees turning 60 this year. Rep. John Larson’s Social Security COVID-19 Correction and Equity Act repairs a glitch in current law which, if unchecked, would result in a sizable “notch” in retirement income for this age group.

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 COVID crisis. The average beneficiary would take a $2,000 annual hit in their future Social Security benefits – and not just once, but for life.

“Rep. Larson’s bill would spare workers turning 60 this year from a painful and permanent benefit cut.  Tomorrow’s retirees will depend even more on Social Security than the current generation of seniors.  Americans should not be deprived tens of thousands of dollars in retirement income simply because they were born in the wrong year. The COVID-19 Correction and Equity Act offers a commonsense fix to an unintended consequence of Social Security law.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare

Larson’s bill corrects this problem – the result of flawed legislative language in the Social Security amendments of 1977 – by ensuring that the Average Wage Index (for Social Security’s purposes) never drops below the previous year’s level.

In addition to repairing the “notch,” Larson’s bill would make improvements to Social Security that would help ease the financial pain of the COVID crisis for retirees and people with disabilities, including millions of new claimants. 

Here are some of the other major provisions in the Social Security COVID-19 Correction and Equity Act:

  • Increases benefits by 2 percent;
  • increases the threshold to 125 percent of the poverty level for the special minimum benefit, lifting more lifelong workers out of poverty;
  • Reduces taxation on benefits for lower-middle income beneficiaries who are struggling to provide for themselves and their families.

“Certainly, the seniors who would lose massive amounts in Social Security benefits will thank Rep. Larson for finding a solution to the ‘notch.’ But the broad array of program improvements that have been included in the bill will benefit all Americans. We believe that they will prove to be especially helpful to women and those in communities of color who have been hardest hit by the COVID pandemic.” – Max Richtman

If Larson’s legislation passes the House, the bill as a whole may face headwinds in the Senate, where many pieces of legislation to help everyday America’s have perished in Leader McConnell’s “graveyard.”  At the same time, the provision to fix the “notch” – an important technical correction more than a sweeping policy proposal – may survive. As Social Security champions in Congress continue to boost and strengthen the program during the COVID crisis and beyond, repairing the notch would spare those turning 60 this year an arbitrary and unnecessary benefit cut.

Read the National Committee’s endorsement letter of Rep. Larson’s bill here.