Wharton Pension Research Council Working Papers


Andrew G. Biggs

Document Type

Working Paper

Date of this Version



As a group, retirees are more financially insulated from the economic effects of the COVID-19 pandemic than are most other demographic groups in the United States. Yet due to how the Social Security benefit formula interacts with the sharp economic downturn due to the Coronavirus, some groups of near-retirees are likely to suffer substantial permanent reductions to their Social Security retirement benefits. Assuming a 15 percent decline in the Social Security Administration's measure of economywide average wages in 2020, a middle-income worker born in 1960 could have his annual Social Security benefits in retirement reduced by around 13 percent, with losses over the retirement period in excess of $70,000. Methods of addressing this problem are discussed, including both ad hoc adjustments applying only to affected cohorts, and also permanent changes to the benefit formula to prevent similar benefit “notches” from occurring in the future.


retirement, Social Security, Coronavirus, payroll contraction

Working Paper Number


Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. © 2020 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Economics Commons



Date Posted: 03 April 2020