“Notch Babies” – Correcting A Social Security Error

Note: This is an excerpt from our 2022 Ask Rusty book “Demystifying Social Security.” The eBook version is available at Amazon.com at https://www.amazon.com/Demystifying-Social-Security-Ask-Rusty-ebook/dp/B0B7NWZCR2

Much of our work as Social Security Advisors here at the AMAC Foundation deals with relatively common questions affecting a majority of those collecting or planning to collect Social Security benefits. Questions, for example, about personal SS retirement benefits and the optimum time to take them sit atop our list of most frequently asked questions. That is closely followed by questions about spousal benefits, and questions about surviving dependent benefits, followed by questions about working while collecting early Social Security benefits. Medicare eligibility and various nuances associated with the nation’s most important senior healthcare program round out the top five areas most frequently asked about, with multiple and various less-common situations following behind, nearly all of which we are able to answer based on our deep knowledge of Social Security’s vast array of regulations. But sometimes we are asked questions which require even our most senior advisors to pause and conduct careful research to provide a correct answer. We typically capture these situations as unique Case Studies to document our research and response and then use these Case Studies as reference material for our advisor training programs. This story discusses one of the unique case studies our advisors have dealt with.

“Notch Babies” – Correcting A Social Security Error

Our Advisory Service was contacted by someone who felt his mother had been scammed by a person suggesting she could get additional benefits as a “notch baby.” The scammer solicited a contribution to help her get extra money she was supposedly entitled to. The elderly woman’s son was right to be suspicious of the transaction, apparently initiated by someone who took advantage of an unsuspecting elderly Social Security beneficiary. The “notch baby” issue is/was a real one, but no additional benefits are available to anyone currently receiving Social Security benefits. Here’s what the “notch baby” issue is about.

To protect beneficiaries from inflation, in 1972 Congress provided for automatic Cost of Living Adjustments (COLAs) to Social Security benefits based upon the Consumer Price Index. At that time, an error was made in the COLA computation formula, so overly generous COLAs were granted to some beneficiaries. That error was discovered and corrected in 1977, but seniors born before 1917 got a windfall — they got to keep the larger COLA increase which resulted from the error. Trying to be fair, Congress gave retirees who were born between 1917 and 1921 a break too by creating a special “transition formula” for COLA for that five year period. This transition formula was more generous than the fully corrected formula which applied to those born in 1922 or later, but less generous than the incorrect COLA formula used for those born prior to 1917. Those born in the 5 year period between 1917 and 1921 became known as “Notch Babies.” But the Notch Babies weren’t happy. They wanted the same COLA windfall enjoyed by those born prior to 1917. In the early 1990s, Congress created a bipartisan commission to fully investigate the issue, and it was concluded that the so-called notch babies did not get a raw deal and weren’t owed anything further.

Nevertheless, some activists wouldn’t let the issue die. These activists felt that the notch baby period should be extended by five years to include those born before 1927, essentially extending the special (more generous) COLA formula by five years. As recently as 2009, activists were able to get legislation introduced in Congress proposing to extend the notch baby definition and provide additional Social Security compensation to those born before 1927. That legislation failed.

In another case, an elderly widow had been living on her survivor benefit from her deceased husband, who was a notch baby born in 1918. The woman felt that she (and her late husband) had been wrongly denied their full Social Security benefits because he was a notch baby. In this case, we had to explain that the husband had, in fact, received somewhat more generous COLA increases than those born after 1921, though less generous than those born before 1917. Thus, she was receiving the full survivor benefit she was entitled to by current Social Security law.

By definition, “notch babies” are only those born between 1917 and 1921, which means that anyone in that category is, today, over 100 years old. Further, any special accommodation available to notch babies has already been made, and no legislation is currently pending in Congress to extend the notch baby definition beyond the original dates. Thus, anyone purporting otherwise and soliciting money to obtain additional benefits for “notch babies” is a scammer who should be ignored.

For all your questions about Social Security, contact the AMAC Foundation’s Social Security Advisory Service at SSAdvisor@amacfoundation.org, or call us at  1-888-750-2622.