Social Security

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Both sides of the political spectrum can generally agree that Social Security is unsustainable in its current form, but Democrats and Republicans have different ideas when it comes to fixing it. Democrats typically favor lifting the cap on the payroll tax in order to maintain or raise benefits. On the other hand, most Republicans propose cutting benefits, either by reducing monthly checks or raising the retirement age. Currently, high earners pay no Social Security taxes on wages above $118,500.

However, two Republican presidential candidates say they actually want to give millions of senior citizens more money: Sen. Marco Rubio and Gov. Jeb Bush.

First, the bad news
Like most other Republicans, both Rubio and Bush are in favor of some degree of benefit cuts, although neither wants to change the retirement age for those in or near retirement.

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The two candidates agree that the retirement age should gradually be increased for workers who are now under the age of 55. Bush has specifically proposed to increase the full retirement age by one month per year, beginning in 2022, and reduce benefits further for those who choose to file for Social Security early.

Both also want to decrease Social Security payments for high-income workers. Rubio wants to decrease the rate at which wealthier workers' benefits grow, while Bush wants their benefits adjusted downward. In addition, Bush wants to change the way cost-of-living adjustments (COLA) are calculated for all retirees by using the "chained CPI," which tends to grow at a slower rate than the index currently being used. This would translate to smaller annual increases in benefits.

The benefits could outweigh these drawbacks
Rubio and Bush both say they want to strengthen Social Security for low-income retirees by increasing minimum benefits. Bush has said that under his plan, no retiree who has worked for a minimum of 30 years would receive a Social Security benefit of less than $15,000 per year -- that's 125% of the federal poverty level. This means that a married couple who worked all their adult lives would be guaranteed a retirement income of at least $30,000 per year.

Jeb Bush Vert

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Rubio wants to eliminate taxes on capital gains, dividends, and interest income, which will help people with retirement savings, but perhaps would not be of as much use to those who primarily rely on Social Security for retirement income. This means that any investments held in a non-retirement account would grow and compound faster, and retirees would pay far less in taxes when relying on their portfolios for income. Rubio also wants to abolish the estate tax, making it easier to transfer wealth to heirs without the need for complicated (and sometimes costly) estate planning.

As far as the overall population goes, both candidates want to make it easier to save for retirement and encourage Americans to work longer. One way they want to do this is by exempting older workers from the payroll tax, which currently stands at 6.2% of an employee's first $118,500 in wages. Bush wants this exemption to apply for workers over 67, while Rubio wants it to take effect at 65.

Finally, to encourage work, both candidates want to eliminate the Retirement Earnings Test, which can reduce Social Security benefits for workers who haven't reached full retirement age and who earn more than $15,720 per year. Seniors would be able to collect both a full paycheck and a full Social Security check if they chose to file for benefits early and continue to work.

What will actually happen to Social Security?
Most of the candidates have outlined their plans to save Social Security, but whether or not they'll get their way if elected remains to be seen. The most likely fix is a compromise that involves some form of tax increases, some benefit reductions, and some measures to help low-income seniors. So don't expect these (or any other) candidates' plans to be implemented exactly as they're proposed.

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