Social Security beneficiaries face a
“It is a fairly comprehensive bill. It raises a lot in the way of revenues, and it would go a long way towards fixing the shortfall,” said Alicia Munnell, director of the Center for Retirement Research at Boston College and Peter F. Drucker professor of management sciences at Boston College’s Carroll School of Management.
Here are eight things the bill would do if introduced and passed in this legislative session.
1. A more accurate cost of living adjustment (COLA) for Social Security beneficiaries.
Currently, a Consumer Price Index for Urban Wage Earners and Clerical Workers is used to calculate the COLA, which many experts say does not keep up with seniors’ medical costs. The bill would require the Bureau of Labor Statistics to publish a Consumer Price Index for Elderly Consumers each calendar month, which the Social Security Administration would use to calculate COLA benefits. “Improved inflation protection will especially help older retirees and widows who are more likely to rely on Social Security benefits as they age,” Larson’s office wrote in a fact sheet for the legislation.
2. Increase the minimum benefit for lifetime low earners based on years in the workforce.
The legislation would also increase the minimum benefit for people who worked for more than 10 years and would create an alternative minimum benefit. The new minimum benefit would be set at 25% of the poverty line and would be tied to wage levels.
3. Include earnings over $400,000 in the Social Security benefit formula.
Now, payroll taxes are not collected on wages over $132,900. The bill would apply the payroll tax to wages above $400,000 and would only affect the top 0.4% of wage earners, according to the bill fact sheet.
4. Adjust the Social Security insurance contribution to keep the system solvent.
The bill would gradually phase in an increase in the contribution rate starting in 2020 so that by the mid-2040s workers and employers would pay 7.4% instead of 6.2%. For the average worker, this means paying an additional 50 cents every week to keep the system solvent.
5. Increase income threshold amounts and the rate for inclusion of Social Security benefits.
Now, benefits are taxed if a person’s non-Social Security income is over $35,000 for an individual or $32,000 for couples. This bill would raise the threshold to $50,000 and $100,000, respectively.
6. Holding SSI, Medicaid and CHIP beneficiaries harmless.
This legislation would ensure that any increase in benefits from the bill does not result in loss of eligibility for Supplemental Security Income, Medicaid or the Children's Health Insurance Program.
7. Increases for all beneficiaries
The legislation would also provide a 2% increase across the board. “The U.S. faces a retirement crisis, and a modest boost in benefits strengthens the one leg of the retirement system that is universal and the most reliable,” Larson’s office wrote.
8. Establish a Social Security Trust Fund
The legislation would also combine the Old-Age and Survivors Insurance and Disability Insurance Trust Funds into one Social Security Trust Fund, “to ensure that all benefits will be paid.”
