Social Security is one of the most popular government programs, but there are some problems with it.
Many seniors still live in poverty or struggle to meet basic necessities despite these benefits. The income that Social Security provides loses purchasing power over the years and the rights program trust fund could run out of money as early as 2034, necessitating large payments.
In response to these serious problems, Rep. John Larson (D-Conn.) recently enacted the Social Security 2100 Act. The proposed legislation, drafted by the Ranking Member of the Ways & Means Subcommittee on Social Security, would make some critical changes to the pension program. This is what they are.
The Social Security Act 2100 could usher in these changes
If the Social Security 2100 Act were passed by Congress, these are the biggest changes the law would make to the rights program:
- Benefits would increase: Current beneficiaries would receive an immediate benefit increase of approximately 2%. Widows and widowers in two-income households would also be better protected from losing a significant portion of their Social Security income when a deceased spouse’s benefits stop due to their death.
- The rules for annual increases would change: The method used to calculate periodic increases in Social Security would be changed to make sure it more closely reflects the inflation that seniors actually experience. Currently, COLAs are calculated based on changes in a price index that tracks the spending of urban wage earners and white-collar workers, but this would be shifted to an index that tracks the spending of the elderly.
- The minimum benefit is increased: The minimum Social Security benefit would be set at a level 25% above the federal poverty level, and the minimum benefits would be increased to keep up with inflation. Currently, the minimum benefit is so low that no new beneficiaries end up getting it because it didn’t keep up with wage growth.
- Disability benefits become available more quickly: There is now a waiting period of five months before a person can receive Social Security benefits. This would be ended so that people who are too sick or injured to work would not have to wait months for essential support.
- Caregivers can be better provided with: Caregivers who take time off are currently at a disadvantage when it comes to Social Security because benefits are based on the average wage over a 35-year career. Caregiver credits would be provided so that those who care for children or dependents would no longer be penalized with a smaller social security check.
- The trust fund would be supported with new taxes: Social Security has a trust fund to pay benefits in excess of what the program collects in taxes. The trust fund is expected to dry up and necessitate a cut in distributions in 2034. The Social Security 2100 Act would impose more Social Security taxes on the wealthiest Americans to support it. These Americans currently only pay taxes on a small portion of their income, but under the new law, they would be taxed on income over $400,000 that is currently not subject to Social Security taxes.
These changes would have a major impact on Social Security, making the program more financially stable and better supporting seniors.
It remains unclear whether these provisions will ever be signed into law, but current and future retirees should be aware of the possibility so they can monitor the progress of the legislation.