On Tuesday, millions of Americans will head to the polls. Some will cast votes on ballot initiatives in their respective states. Many will choose candidates to fill local and state-level positions.
Every voter will have the opportunity to influence the makeup of the next U.S. Congress. All 435 seats in the U.S. House of Representatives and 35 U.S. Senate seats are up for grabs.
RealClearPolitics projects that the GOP will pick up between 15 and 48 House seats -- enough to hold a majority in the chamber. It also predicts that Republicans will narrowly retake control of the Senate, although several races are very close.
Retirees should be especially interested in the outcome of the upcoming vote. Here are three huge Social Security changes that could be on the table after the November elections.
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1. Increase minimum benefit
More than 150 current GOP members of the U.S. House belong to the Republican Study Committee (RSC) caucus. The RSC's proposed budget for fiscal year 2023 reveals several changes to Social Security. The first reform mentioned is to increase the minimum benefit to help low-income Social Security recipients.
In particular, Republicans want to create a new minimum Social Security benefit for anyone who had at least 10 years of earnings. This new benefit would be equal to 15% of the average wage index (AWI), a metric that tracks wage growth for American workers.
This minimum benefit would scale up based on the number of years of work. It would max out at 40% of the AWI for workers with at least 40 years of covered work experience.
The current AWI is $60,575.07. Based on this level, the proposed GOP change would increase the minimum benefit to $9,086.26 for individuals who worked 10 years and to $24,230.03 for individuals who worked 40 or more years.
2. Increase the full retirement age
The RSC also wants to modify the Social Security full retirement age to reflect increasing longevity. For anyone born in 1960 or later, the full retirement age is currently 67. The GOP caucus would like to gradually increase the full retirement age to 70 by three months per year through 2040.
After 2040, the Social Security full retirement age would be linked to the life expectancy for retirees. Should life expectancy decrease in the future, the full retirement age would be lowered. The RSC believes that this approach will help alleviate the financial pressure on Social Security that has resulted from fewer workers per beneficiary.
Note that this proposed change wouldn't impact anyone who currently receives Social Security benefits or is age 55 or older. The RSC also would increase the number of working years used to calculate benefits from 35 to 40 to reflect the increased full retirement age.
3. Eliminate penalties for continuing to work
Currently, individuals who claim Social Security benefits before the full retirement age can continue to work. However, benefits will be withheld if their income is above a specified threshold. This earnings test remains in place until full retirement age is reached.
The RSC wants to eliminate the penalties for early retirees who want to continue working. Under the GOP caucus's proposed change, there would be no earnings test for early retirees. Anyone who claims Social Security benefits before the full retirement age would receive their early retirement benefits while working.
Also, current Social Security beneficiaries with adjusted gross income plus nontaxable interest plus one-half of Social Security benefits of more than $25,000 (or $32,000 for married individuals filing jointly), must pay federal income taxes on part of their Social Security benefits. The RSC believes that this creates a disincentive for working and penalizes marriage. To remedy this, the GOP caucus proposes phasing out the federal tax on Social Security benefits and eliminating the "marriage penalty" beginning in 2051.
Weighing the odds
All three of these Social Security proposals could receive a lot more attention if the GOP regains control of the U.S. House of Representatives. The odds of that happening appear to be relatively high at this point.
But any change to Social Security would also require passage by the Senate. It's very unlikely that Republicans will secure a filibuster-proof majority in the Senate. This means that support from at least some Democrats will be required. President Biden would also have to go along with any reforms to Social Security.
Don't write off the possibility of at least some bipartisan compromise, even in the current polarized environment. Joe Biden ran for president in 2020 on a platform of saving Social Security that included increasing the minimum benefit for older beneficiaries. The full retirement age has been increased gradually in the past. This idea for bolstering Social Security also enjoys widespread support from Americans of both major political parties.
It's too soon to know if any of these three changes proposed by the RSC will ultimately be implemented. However, Tuesday's elections could be pivotal in setting the stage for Social Security reform.
