Senator Kamala Harris (D-California) has officially been chosen to fill the role of Vice President if Joe Biden wins the 2020 U.S. presidential election. If the Biden/Harris ticket prevails in November and takes office, it's likely Harris will have the president's ear on important policy matters -- including on Social Security.
Since the next presidential election very well may determine the fate of this popular program, current and future retirees should take a close look at each candidate's record on retirement benefits.
The good news for those hoping to protect Social Security is that Harris has actually promised an expansion of the program. In fact, last year, the senator introduced a bill that would increase benefits for a particular group of retirees. Here's what you need to know about it.
Which seniors would benefit from Harris' plan to boost Social Security?
In February 2019, Sen. Harris introduced a bill called the Social Security Expansion Act, which would make some fundamental changes to Social Security. Among those changes was an across-the-board benefits increase for lower-income retirees. Specifically, those who earn less than $16,000 annually under the current rules would be given a benefit boost totaling around $1,342 per year, according to Harris' description of the legislative proposal.
This benefit boost would be paid for, in part, by subjecting more income to Social Security tax. Under the current system, Social Security taxes are assessed only on earnings up to the annual wage base limit. The Expansion Act would subject all income above $250,000 to the tax. With this change, Social Security's trust fund would be solvent until 2071, even with the expanded benefits (it's currently slated to run dry in 2035, necessitating a 24% cut to retirement benefits if lawmakers don't act).
Harris wasn't the only Democrat to sign on to the Social Security Expansion Act, as it was co-sponsored by Democratic Senators Bernie Sanders, Cory Booker, Kirsten Gillibrand, and Jeff Merkley. But now that she's been named as Joe Biden's running mate, it's especially important to understand her position on Social Security. With the introduction of this bill, she made clear she's in favor not just of preventing benefit cuts but also making sure the lowest-income seniors see larger checks.
In fact, in her press release announcing it, Harris said she felt it was necessary to provide these expanded benefits because many Americans were struggling to keep up with rising living costs. This need has only grown more pressing as COVID-19 has pushed the country into a recession and the buying power of Social Security benefits has been steadily eroding.
Will seniors see a Social Security raise?
Although Harris is in favor of providing extra Social Security benefits to low-income retirees with incomes below $16,000, there's no guarantee this will happen. In fact, it's not yet clear if the Biden/Harris ticket will prevail over President Donald Trump in November. And even if the Democrats take the country's highest office, Harris' plan to expand benefits would likely be dead on arrival if the Republicans retain their majority in the Senate.
Still, both Biden and Harris have indicated their support for not just preserving Social Security benefits but expanding them. For those hoping for more money in retirement, it's a positive sign that candidates are talking seriously about the appropriate method of boosting benefits.
Since you still can't count on a Social Security raise, though, you should make your financial plans with the assumption your benefits will stay the same or even potentially fall within the next 15 years. Current retirees must make sure they're not over-invested in stocks and exposed to too much risk in their portfolio, and should aim to have liquid cash to cover their costs for at least two to five years in case of another market crash. Future retirees need to think about whether delaying their claim for Social Security makes sense to increase the size of their monthly checks, while also planning for their savings to play a bigger part in supporting them in retirement in case of benefit cuts.
By preparing for the worst, you'll ensure you're in a good place even if the Harris plan to increase Social Security benefits never comes to fruition.