If you receive a Social Security benefit, you can increase it if Biden is sworn in as President-elect. With COVID-19 headlines during the election, Biden’s social security plan wasn’t exactly a hot topic. It focused a lot on fixing the program’s solvency issues for future recipients.
But Biden has a number of proposals that would increase scrutiny of people currently receiving Social Security benefits. Approved, with a divided Congress, he would face a fierce battle. Still, expect the 46th President to advocate these changes which will increase your monthly check.
Image Source: US Department of State Flickr.
1. Changing how your cola counts
Biden supports changing how life cost adjustments (COLA) are calculated to better reflect seniors’ costs. Social Security currently uses the Consumer Price Index for urban wage earners and clerks (CPI-W), excluding households where at least one person is not working. That means many have retired. Compared to people of working age, retirees spend an average share of their income on medical and housing expenses, both of which rise faster than inflation.
The Biden plan will use the consumer price index for the elderly (CPI-E), which measures spending for older Americans. Using CPI-E will only increase the number of calls by 0.2% on an average year. If the 2021 COL had been calculated on the basis of CPI-E, it would have been 1.5% instead of receiving 1.3% beneficiaries, although the effect could be more meaningful when combined over time.
2. Minimum benefit if you have worked for 30 years
Biden wants a minimum benefit of 125% of the federal poverty level for low-income earners who have worked for at least 30 years. Based on the 2020 federal guidelines for 48 relevant states and the District of Columbia, anyone with a 30-year work record will receive a guaranteed monthly benefit of approximately 1, 1,329. According to Penn Warren’s budget model analysis, Biden’s plan would increase benefits anywhere from 5% to 50% for a small group of people working for 10 to 30 years.
3. A higher gain after 20 years
The Biden plan will increase benefits by 5% for those who have benefited for 20 years or more. The bonus will be phased out at 1% per annum, starting with 16 years of benefits. The goal is to accelerate payments for the oldest recipients of Social Security, as they run the risk of exhausting their retirement savings.
Iving. High benefits of spouse survival
Current Social Security rules allow widowed spouses to collect their own benefits or 100% of the deceased spouse’s benefits. For couples receiving almost the same amount, this means that the death of a spouse can result in a 50% reduction in income. As a result it can be disastrous for seniors that some expenses, such as housing, do not change after the death of a spouse, which is why Biden proposes a 20% benefit increase for a surviving spouse.
What about future recipients?
Social Security is projected to run out of resources by 2031. This does not mean that it is breaking down. The program is funded by payroll tax, but if it spends every dollar in its debt, it will only fund its% of% obligations using payroll tax.
Still, some major changes are needed, given that it is facing a 2.9 trillion shortfall. Biden has proposed raising taxes to raise funds on higher-income taxpayers. In 2021, workers will only pay Social Security tax on the first wage of Security 142,800. President-elects want workers to pay social security taxes on wages above 000 400,000, while earnings between these thresholds are exempt.
The bottom line, though, is that whether you’re a current or future recipient, don’t expect anything out of the ordinary after Biden is sworn in.
