5 (Potential) Changes to Social Security Under the Biden Administration

Although President Biden is currently focused on infrastructure and hasn't yet introduced any bills that would directly affect Social Security, he made a number of proposals on the campaign trail.

If he's able to get broad support and get his preferred policies through Congress, big changes could be coming to this important benefits program.

In particular, here are five things that Biden wants to change about Social Security.

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Currently, most but not all workers are taxed on their entire income to help fund Social Security. Specifically, workers pay Social Security tax on wages up to $142,800.

However, many people earn more than this amount, so they don't pay Social Security taxes on earned income above it. Biden would change this rule.

Specifically, he has proposed imposing Social Security taxes on wages above $400,000. This would create a donut hole where earnings between $142,800 and $400,000 aren't taxed, but money earned above and below these thresholds is.

Wealthier Americans who would be asked to pay these additional taxes would likely not see more Social Security benefits in retirement. This would be a major change from the current Social Security rules, in which workers receive benefits that are directly correlated to the amount of taxes they paid in to the system.

ALSO READ: 3 Ways to Avoid Taxes on Your Social Security Benefits

Under the current Social Security benefits system, survivor benefits are available for widows and widowers. If a higher-earning spouse passes away first, the widow(er) can receive benefits based on either the money the deceased was receiving, or the deceased person's standard benefit (if death occurred before benefits began).

Unfortunately, the death of a spouse still results in a major cut to household income in many cases. And that's especially true when both spouses had similar incomes and thus were receiving benefits that were close to equal. In that case, household income could be cut in half when a spouse passed.

Biden has proposed providing more generous survivor benefits to those affected by this problem. Specifically, he'd allow affected widows and widowers to keep a larger share of combined benefits. His campaign indicated that affected beneficiaries would get around 20% more retirement income under his plan.

Although there's supposed to be a minimum benefit floor to ensure lower-earning workers don't end up with too little retirement money, the formula for determining the minimum benefit didn't work in practice.

The minimum benefit has fallen drastically behind average Social Security benefits, very few people receive it, and starting in 2018, there were no longer any new recipients of the minimum benefit.

Biden wants to change that by guaranteeing a benefit equaling at least 125% of the poverty level to any worker who has at least a 30-year work history.

Under Biden's plan, some of America's oldest retirees would get a big boost to their benefits.

Specifically, anyone who had been receiving Social Security checks for 20 or more years would get a 5% uniform increase to their primary insurance amount (their standard benefit).

This increase would be phased in from years 16 to 20 for eligible workers, and would help to ensure retirees don't keep losing ground due to rising inflation and diminishing savings.

ALSO READ: 3 Things Nearly Anyone Can Do to Boost Their Social Security Benefits

Finally, the formula by which Social Security raises are calculated would change under the president's proposed plans.

Currently, retirees get a raise if the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) shows rising prices year over year. Biden instead wants to use the Consumer Price Index for the Elderly (CPI-E), which measures price increases differently.

See, CPI-W doesn't weigh certain expenses, such as healthcare and housing, heavily enough in its calculation since urban wage earners and clerical workers don't spend as much in these areas as seniors do. Biden believes CPI-E would better reflect the changes in the prices of goods and services seniors use most.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Although President Biden has lots of ambitions for Social Security, it's not clear if any of these changes will actually happen.

The Democrats have a narrow majority in both the House and Senate. And advancing legislation without Republican support is difficult in the Senate because the GOP can filibuster bills that don't have the support of 60 senators.

Because of these obstacles, and the fact that the right and left have ample disagreements about the path forward, it's not clear if the Biden administration will be able to make any modifications to Social Security at all.

In fact, odds are against it, although anything is possible.

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