‘Any changes made to the program should be based on need, not age,’ Social Security expert says.
As Americans reach the age of retirement, the majority of them will come to depend on the Social Security trust fund benefits they’ve been investing in from the first day the taxes were taken out of their first paycheck.
However, the $22.4 trillion funding plunge predicted in the 2023 Trustees Report could result in benefit cuts of up to 23 percent for America’s retirees beginning in 2033.
Unlike Medicare, Social Security Old Age and Survivors Insurance Trust (OASI) is not heading toward bankruptcy or insolvency. As long as there are Americans working there will be money flowing into the trust fund coffers to cover the benefits of current retirees. What is at stake are the benefits of future recipients.
In an effort to circumvent the future risk to these benefits, President Joe Biden has put forth a four-point proposal to bolster the trust fund’s current assets and help replenish the projected deficit.
Those proposed changes are:
- Taxing wages above $400,000 while leaving all earned income between $160,200 and $400,000 untaxed. As it is currently, any wages above $160,200 are exempt from Social Security tax.
- Shifting the measure for Social Security’s cost-of-living adjustments (COLAs) from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E).
- Raising the Primary Insurance Amount (PIA) received by retired workers annually by 1 percent between the ages of 78 and 82, which would eventually amount to a 5 percent increase.
- Increasing the special minimum benefit for lifetime lower-wage Social Security beneficiaries to 125 percent of the federal poverty level.
Rachel Greszler sees both good and bad in the list of proposals.
Ms. Greszler, a senior research fellow at the Roe Institute, has extensive expertise in the areas of retirement and labor policies in programs such as Social Security, pensions, disability insurance, and worker compensation.
Before joining The Heritage Foundation in 2013, she served for seven years as a senior economist on the staff of the Congressional Joint Economic Committee.
So what does Ms. Greszler see as the good and bad points in Mr. Biden’s proposal?
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