Ask Larry: Will Congress Fix The Calculation Problem Caused By Covid-19 For Those Born In 1960?

Today’s column addresses questions about whether Congress will correct an issue caused by Covid-19 that could mean lower lifelong benefits for those born in 1960, potential repercussions of Social Security overpayments and withdrawing a retirement benefit and reverting to survivor’s benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, which markets Maximize My Social Security and MaxiFi Planner.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.


Will Congress Fix The Calculations Problem Caused By Covid-19 For Those Born In 1960?

Hi Larry, Do you think our legislators will fix the Social Security benefit calculation problem for those of us born in 1960 brought on by the Covid pandemic? Thanks, Charles

Hi Charles, To clarify the significance of your question for other readers, I’ll start with a brief explanation. Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings.

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Indexing converts a person’s historical annual earnings to amounts more reflective of current day dollars. For example, a person born in 1959 who earned $20,000 in 1991 would have those earnings indexed to an amount close to $50,000 when calculating their Social Security retirement benefit rate.

Worker’s earnings histories are indexed based on the average wage index (AWI) in the year they turn 60. Therefore, the AWI in 2020 will be used to calculate the retirement benefit rates for people born in 1960. And if the 2020 AWI is lower due to the pandemic, the historical indexed earnings amounts and the resulting benefit rates for people born in 1960 will also be lower.

I believe Congress will take action to address the benefit calculation problems caused by the pandemic. In fact, I believe there are already Congressional bills in the works to address this situation. Best, Larry


How Will My Husband’s Overpayment Affect Us?

Hi Larry, my husband is 55 and has been collecting Social Security Disability benefits for about six years now. He told me recently that he was notified by SSA that he earned too much, because he held a part time job as supplement income, and may have to pay the excess earnings back.

I’m very concerned about how his situation will affect my future benefits, if at all. I should be able to draw from his benefit as the higher wage earner, but I’m not certain how the l news will affect us. Thanks, Susanne

Hi Susanne, There are limits on how much a person can earn and still be considered to be disabled and eligible for Social Security disability (SSDI) benefits. If a person’s earnings exceed those limits, their SSDI benefits may be suspended or terminated.

And if Social Security wasn’t immediately aware of a person’s earnings and as a result pays benefits for a period of time when a person’s SSDI should have been suspended or terminated, the person involved is expected to repay any overpayment of benefits.

Your husband could appeal Social Security’s determination that he’s been overpaid, or he could ask for the overpayment to be waived (i.e. forgiven). In order to qualify for waiver of his overpayment, your husband would have to be determined to not have been at fault in causing the overpayment, and he would have to be financially unable to repay the overpayment.

If your husband doesn’t repay the overpayment and if the overpayment isn’t waived, it will stay on his record and Social Security will seek to recover the overpayment from his future benefit payments.

If Social Security is unable to recover the overpayment from your husband’s benefits, they could try to collect any outstanding overpayment by withholding any spousal benefits that you qualify for in the future.

However, if recovery from your spousal benefits is proposed, you could also file a request for waiver of the overpayment. Social Security could not recover your husband’s overpayment from any benefits that you are entitled to based on your own earnings, though. Best, Larry


Am I Able To Pay Back My Own Benefits And Revert To Drawing Survivor Benefits?

Hi, My wife passed away last year. I started taking Social Security widower’s benefits but I changed over to my benefit at 67 last month. I realize I have made a mistake and would like to pay back my benefits and revert back to my widower’s benefits and delay my retirement benefit so I can get the 8% credit per year until I turn 70. Am I able to do this now? Or did I make a mistake I can’t undo? Thanks, Trevor

Hi Trevor, I’m sorry for your loss. Yes, it sounds like you should be able to withdraw your application for Social Security retirement benefits as long as you haven’t previously filed and withdrawn a claim for those benefits. You will also likely need to reapply for survivor benefits in order to resume drawing those benefits.

I would suggest calling Social Security to work with a claims representative in order to fill out the necessary paperwork. My company’s software — Maximize My Social Security or MaxiFi Planner — can confirm that this is indeed your best strategy.

You can model having filed for the benefits you’ve filed for and then you can model that you didn’t do so to see your lifetime available benefits after withdrawing. Assuming withdrawing is your best option, you can see how much more benefits you can get from doing so. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


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