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 afford the necessities despite these benefits. The income Social Security provides has been losing buying power over the years, and the trust fund for the entitlement program could run out of money as soon as 2034, necessitating big benefit cuts.
In response to these serious issues, Rep. John Larson (D-Conn.) recently introduced the Social Security 2100 Act. The proposed legislation authored by the Ranking Member of the Ways & Means Subcommittee on Social Security would make a number of crucial changes to the retirement benefits program. Here's what they are.
The Social Security 2100 Act could usher in these changes
If the Social Security 2100 Act passed Congress, these are the biggest changes the law would make to the entitlement program:
- Benefits would increase: Current beneficiaries would receive an immediate benefit increase of around 2%. Widows and widowers in dual-income households would also be better protected from losing a substantial portion of their Social Security income when a deceased spouse's benefits stop due to their passing.
- The rules for annual raises would change: The method used to calculate Social Security's periodic raises would be changed to ensure that it better reflects the inflation seniors actually experience. Currently COLAs are calculated based on changes in a price index that tracks spending among urban wage earners and clerical workers, but this would be shifted to an index that tracks spending among the elderly.
- The minimum benefit would be increased: The minimum Social Security benefit would be set to a level that's 25% above the federal poverty level, and minimum benefits would be increased to keep pace with inflation. Currently, the minimum benefit is so low that no new beneficiaries actually end up getting it because it failed to keep pace with wage growth.
- Disability benefits would become available more quickly: There is a five-month waiting period right now before someone can receive Social Security Disability benefits. This would be ended so people who are too sick or injured to work wouldn't have to wait months to get essential support.
- Caregivers would be better provided for: Caregivers who take time off work are currently disadvantaged when it comes to Social Security because benefits are based on average wages over a 35-year career. Caregiver credits would be provided so those who care for children or dependents would no longer be penalized with a smaller Social Security check.
- The trust fund would be shored up 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 run dry and necessitate a benefits cut in 2034. The Social Security 2100 Act would impose more Social Security taxes on the wealthiest Americans to shore it up. These Americans currently pay taxes only on a small part of their income, but with the new law, they would be taxed on earnings above $400,000 that currently isn't subject to Social Security taxes.
These changes would have a major impact on Social Security, making the program more financially stable and providing better support to seniors.
It remains unclear if these provisions will ever be signed into law, but current and future retirees should be aware of the possibility so they can follow the progress of the legislation.