Millions of seniors collect monthly Social Security benefits that help them stay afloat financially during retirement, but the program is clearly in trouble and it also has flaws. It's not surprising, then, that Democratic presidential candidate Joe Biden has some big plans for Social Security. Here are three significant changes he's looking to implement if elected.
1. A higher minimum monthly benefit
Anyone with enough work credits is eligible to collect Social Security during retirement. Even those who end their careers with millions in savings are still entitled to a monthly benefit.
But let's be real: Low-income seniors need those benefits the most, and Biden wants to put more money in their pockets by increasing the special minimum benefit to at least 125% of the federal poverty line. That would result in an increase of over $400 a month, according to the Penn Wharton Budget Model at the University of Pennsylvania.
2. Higher survivors benefits
When Social Security recipients pass away, the spouses they leave behind are entitled to survivors benefits, which are equal to 100% of what deceased beneficiaries collected while they were alive. That may seem generous, but let's not forget that often, what will happen is that a couple will go from two Social Security checks a month to one when a spouse passes away, resulting in an overall hit to household income. Biden is therefore proposing to increase survivors benefits by 20% to help make up for that shortfall.
3. More taxes for higher earners
Social Security gets the bulk of its revenue from payroll taxes. Specifically, workers pay 12.4% of their wages, up to a certain limit, toward Social Security. Those who are self-employed cover that entire tab, while those who work for employers pay half (6.2%) and their employers pay the other half.
In 2020, workers are only paying Social Security taxes on their first $137,700 of wages. In 2021, that threshold will increase to $142,800.
Biden, however, is looking to charge payroll taxes on wages of $400,000 and above, so people with incomes above $400,000 wouldn't be subject to Social Security taxes on wages between $142,800 and $400,000 next year. Rather, those taxes would kick in starting at the $400,000 mark.
The stakes are high
Countless Americans are invested in seeing Social Security remain viable on a long-term basis. Right now, the program is facing a funding deficit that could result in benefit cuts within the next 15 years, and that could leave millions of current and future beneficiaries dangerously cash-strapped. It's for this reason that Social Security is such an important issue in the upcoming presidential election, and one that senior voters, in particular, may be mindful of this November.
It's clear that Joe Biden has a comprehensive plan to help seniors better benefit from Social Security while strengthening the program's long-term prospects. Let's hope that if he's elected, he'll prioritize Social Security so that it's there for the people who need it the most.
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