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Summary:
Some Social Security beneficiaries who were born from 1917 to 1921 -- the socalled notch babies -- believe they are not receiving fair Social Security benefits.1 The notch issue resulted from legislative changes to Social Security during the 1970s. The 1972 Amendments to the Social Security Act first established cost-of-living adjustments (COLAs) for Social Security benefits. This change was intended to adjust benefits for inflation automatically, but an error in the formula caused benefits to rise substantially faster than inflation. Congress corrected the error in the 1977 Amendments. However, benefits for beneficiaries born from 1910 to 1916 were calculated using the flawed formula, giving them unintended windfall benefits. The notch babies, born from 1917 to 1921, became eligible for benefits during the period in which the corrected formula was phased in. Some feel it is unfair that their benefits are lower than those who received the windfall benefits. The term "notch" comes from graphs of benefit levels over time; there is a v-shaped dip for those born from 1917 to 1921, during the transition to the corrected formula. A number of legislative attempts have been made over the years to give notch babies additional benefits, but none have been successful. A congressionally mandated commission studied the issue and concluded in its 1994 report that "benefits paid to those in the `Notch' years are equitable, and no remedial legislation is in order." This CRS report will be updated as events warrant.
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