The term "Notch" refers to the difference in Social Security benefits paid to people born between 1917 and 1921, and those paid to people before then. The "Notch" occurs because some workers born between 1910 and 1916 receive unintended windfall benefits due to a mistake in the 1972 computation method enacted by Congress that overcompensated for inflation.

The mistake was corrected by legislation enacted in 1977, and benefits for all workers born after 1916 are computed under the correct method. Workers born between 1917 and 1921 are receiving appropriate benefits at levels that were intended by Congress.

No inequity has occurred with regard to these workers. Legislative proposals to address the "Notch" would simply extend the unintended windfall benefits to additional people. Cost projections for bills that would increase benefits for people born in the Notch years (1917-1921) range from $25 billion to $860 billion over the next 10 years. These costs would reduce the Social Security trust fund reserves that are intended for "baby boom" generation retirees.

The Social Security Notch Commission, a 12-member bipartisan group appointed by the President and Congress, conducted a comprehensive study of the notch issue in 1994. The commission's report concluded that "benefits paid to those in the 'notch' years are equitable, and no remedial legislation is in order."

For the full report, see Final Report on the Social Security "Notch" Issue.

You can also access a publication The "Notch" Provision.

More detailed information regarding the history of the Notch issue can be accessed on the Social Security Administration History site.