Global Courant 2023-05-29 04:00:16
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With the Social Security Old Age and Survivors Insurance Trust (OASI) looming depletion by 2033, President Joe Biden has proposed what MSN calls a “sweeping four-point plan” to bolster funds in the trust and help the $22.4 trillion to fill. funding shortfall shown in the 2023 Trustees Report. If the federal government can’t fix the shortfall, it can lead to benefit cuts up to 24% for retirees from 2033.
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While some of the changes proposed by Biden will mostly affect high earners and corporate executives — those who have exponentially higher retirement savings plans than the average American — will affect some middle and lower income earners, especially those who may depend on Social Security benefits in the future. .
Implement payroll taxes for income over $400,000
Currently, any earned income less than $160,200 is subject to a 12.4% payroll tax. Income exceeding that amount is not subject to OASI taxes. Biden plans to tax earned income in excess of $400,000, leaving wages in excess of $160,200 to $400,000 untaxed.
Change the way COLA increases are calculated
Each year, Social Security benefits are assessed against inflation and adjusted through Cost of Living Allowance (COLA). Currently, the administration uses the consumer price index for urban wage earners and white-collar workers (CPI-W) to calculate COLA. But this number doesn’t necessarily reflect the lifestyle and spending of retirees. Shifting COLA calculations to numbers linked to the consumer price index for the elderly does not solve the Social Security problem. But it could put more money in the pockets of retired Americans who need it most.
Increase the amount of primary insurance
The Primary Insurance Amount (PIA) is a number that indicates how much money you will receive in Social Security benefits, depending on the age at which you start claiming benefits and your average indexed monthly earnings (AIME). Raising the PIA for Americans ages 78 to 82 would help those who experience rising expenditures later in life, such as health care.
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Increase the special minimum benefit for lifelong workers with lower wages
The low-paid receive a special minimum benefit, regardless of how much they earned while working. By 2023, a lifetime low-earning worker would receive only $12,402 in Social Security benefits annually, or $1,033.50 per month. Biden plans to raise the minimum benefit to 125% of the federal poverty level for an individual. For example, in 2023, someone receiving the special minimum benefit would receive $1,518.75 per month with the boost.
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Unfortunately, the plan is unlikely to make it to Congress, MSN reported. Any Social Security overhaul plan would need bipartisan support in Washington, and so far Democrats and Republicans have been unable to agree on ways to simultaneously strengthen the Social Security coffers and increase benefits for those who need them. need most. .
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This article originally appeared on GOBankingRates.com: 4 Social Security shakes from Biden that could hit your wallet by 2024
