Ask the Advisor: Eligible For Notch Reform Benefits?

I was born September 2, 1923, and I’m a Notch Baby.  My husband died June 10, 1999, and I now receive his Social Security benefits.  I work full time and they credit the Social Security taxes that I pay monthly to my low Social Security work record, for my own retirement benefit, which I do not receive.  My payroll taxes do not change my monthly Social Security payment.  If the Notch bill passes will I receive any money because I am a Notch Baby or will they continue to credit my own work record? — T.P.

From the editor, Mary Johnson: 
Social Security credits a worker’s earnings to his or her own retirement benefit.  For beneficiaries who receive a retirement benefit based on their own work record, added earnings may increase their monthly benefit over time.  In addition, a delayed retirement benefit is increased by a delayed retirement credit for each month you postpone drawing benefits after you first become eligible.  Since you are receiving a widow’s or survivor’s benefit based on your husband’s account, however, your earnings from work do not increase those payments. 

You did not say whether you previously received a retirement benefit based on your own work record prior to receiving your current survivor’s benefit.  If you did not, then you might be able to switch to your own retirement benefit if it is higher than your widow’s benefit.  You should check with Social Security to see what your own retirement benefit would be now that you have a few years of additional earnings and credits for delayed retirement.  If your own retirement benefit is higher, then you could and should switch, but you must apply to do so. 

Regarding Notch Reform, since you are receiving benefits on your deceased husband's account, was HE a Notch Baby?  If so, then you could opt for either the higher monthly benefit or Lump-Sum option if “The Notch Fairness Act” becomes law.

If he was not a Notch Baby, and you have never received your own retirement benefit, if The Notch Fairness Act is enacted, you should find out what the monthly retirement benefit would be based on your own work record again.  If your own retirement benefit would be higher than the benefit you get now you may want to switch, but that decision should only be based upon how long you would receive the higher monthly benefit.  Under the current Notch Reform proposals, higher benefits might only last four years.  You could not switch back to a survivors benefit once the higher monthly Notch Reform benefits ended. 

Be forewarned that according to noted economist John Haldi’s study of the Notch, a Notch Baby’s extra years of work after postponing retirement benefits may not have much effect on increasing one’s retirement benefit.  The 1977 law changes to the benefit formula gradually extended the averaging period that Social Security uses to determine average lifetime earnings.  For many Notch Babies this meant a worker’s wages are averaged over a longer period of time than persons who were born earlier and was in part responsible for producing a lower benefit than retirees who were born a few years earlier. 

October 2003

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