New Administration & Social Security

[Tekward]

Some interesting possibilities that may affect wealth management projections. Nothing radical or unreasonable:

1. Changing how your COLA is calculated
   
   
2. A minimum benefit if you worked 30 years
   
   
3. A higher benefit after 20 years
   
   
4. Higher benefits for surviving spouses
   
   

https://www.fool.com/investing/2020/12/20/4-ways-joe-biden-could-boost-your-social-security/

 

[MarieIG]

Nothing about the poor shlubs who turned 60 in 2020?

 

[USGrant1962]

So the trust fund runs out even sooner. Nice.

 

[SnowballCamper]

It's insane to increase benefits without fixing the shortfall... But politicians only care about votes, and will never pay the bill. Unlike the rest of us here who generally pay our bills.

 

[pb4uski]

Seems like you guys are jumping the gun on getting excited:

The bottom line, though: Whether you're a current or future recipient, don't expect anything too drastic after Biden is sworn into office.

 

[athena53]

I'd already read about the proposal to raise Survivor benefits 20% to alleviate the "sticker shock" for many widows and widowers when household SS goes from 150% of the primary earner's PIA to 100%. As a widow with (significant) other income I'm not holding my breath waiting to see it in my own SS payment.

In 1983, SS laws changed to allow a widow who remarried after age 60 to continue to receive her Survivor benefit rather than half her new husband's benefit, because many seniors were co-habitating rather than losing the SS due to remarriage.

The SS system has a lot of complicated moving parts but the provisions for transition to Survivor benefits after the death of a spouse have been consistent and transparent.

Sigh. I wish people would plan better. That large sucking sound you hear is more money draining out of the Trust Fund.

 

[Ready]

For 2021 SS is taxed on income up to $142,800. If they just passed a law increasing the cap to something a little higher than that they could begin to catch up for the eventual shortfall.

If you are already making $142,800 in salary, it would seem like paying SS on income up to $165,000 would not be that much of a burden. It's much better than shorting senior citizens who rely on it, or playing around with the full retirement age again.

 

[aaronc879]

Seems like you guys are jumping the gun on getting excited:

"The bottom line, though: Whether you're a current or future recipient, don't expect anything too drastic after Biden is sworn into office."

If i'm not mistaken, there needs to be 60 votes in the Senate to pass any of those things. That means the plan will have to be supported by both sides so I agree there won't be anything too drastic.

 

[Letj]

If i'm not mistaken, there needs to be 60 votes in the Senate to pass any of those things. That means the plan will have to be supported by both sides so I agree there won't be anything too drastic.

I don’t know if that’s true. A lot was passed in the last Congress and there wasn’t 60 votes.

 

[Aerides]

I don’t know if that’s true. A lot was passed in the last Congress and there wasn’t 60 votes.

For bills to pass with a simple majority, typically they have to fall under the budget reconciliation. Changes to SS are excluded from eligibility in reconciliation.

 

[Tekward]

For 2021 SS is taxed on income up to $142,800. If they just passed a law increasing the cap to something a little higher than that they could begin to catch up for the eventual shortfall.

If you are already making $142,800 in salary, it would seem like paying SS on income up to $165,000 would not be that much of a burden. It's much better than shorting senior citizens who rely on it, or playing around with the full retirement age again.

From the article: Social Security is projected to exhaust its reserves by 2031. That doesn't mean it's going broke. The program is funded by payroll taxes, but if it spent every dollar in its reserves, it would only be able to fund 76% of its obligations using payroll taxes.
Still, some big changes are needed, considering that it's facing a $2.9 trillion shortfall. Biden has proposed raising taxes on high earners to shore up funds. In 2021, workers will only pay Social Security taxes on the first $142,800 of wages. The president-elect wants to make workers pay Social Security taxes on wages above $400,000, while keeping earnings between these thresholds exempt.

 

[pb4uski]

For 2021 SS is taxed on income up to $142,800. If they just passed a law increasing the cap to something a little higher than that they could begin to catch up for the eventual shortfall.

If you are already making $142,800 in salary, it would seem like paying SS on income up to $165,000 would not be that much of a burden. It's much better than shorting senior citizens who rely on it, or playing around with the full retirement age again.

I was over the cap for many years and always thought that they should increase it or even eliminate it and perhaps add in a 10% bend point so those who pay more get at least a little something out of it and the rest goes to help the system as a whole.

That said, I'm not in favor of the doughnut hole in the payroll tax for earnings between $142,801 and $400,000 that has been proposed.

 

[USGrant1962]

From the article: Social Security is projected to exhaust its reserves by 2031. That doesn't mean it's going broke. The program is funded by payroll taxes, but if it spent every dollar in its reserves, it would only be able to fund 76% of its obligations using payroll taxes.
Still, some big changes are needed, considering that it's facing a $2.9 trillion shortfall. Biden has proposed raising taxes on high earners to shore up funds. In 2021, workers will only pay Social Security taxes on the first $142,800 of wages. The president-elect wants to make workers pay Social Security taxes on wages above $400,000, while keeping earnings between these thresholds exempt.

Yes. Analyses I've seen say that proposed tax increase only partially closes the existing gap, and in no way funds increased benefits.

 

[mountainsoft]

I'm not in favor of the doughnut hole in the payroll tax for earnings between $142,801 and $400,000 that has been proposed.

Agreed. I have never understood the reasoning behind the donut hole. It just seems to make more sense to have all income subject to taxes. Then again, that's too simple and we know government doesn't do simple.

I've never earned a high income so the proposed minimum social security would be beneficial for me. Still, I would just be happy if I could receive my full SS estimate, without the "haircut". I read something last year that COVID may cause payouts to be as low as 69% so that's what I use in my estimates. Anything extra will just be a welcome surprise.

Somehow government keeps coming up with trillions of dollars for stimulus packages. A couple trillion to shore up social security doesn't seem so impossible.

 

[skipro33]

Maybe tax all income for SS, but exempt all SS from tax. Right now, it's taxed on a sliding scale based on gross income. If they didn't tax it at all, then there wouldn't be need for a rate increase until an equal amount of inflation matches the difference between a taxed SS and an untaxed SS.

 

[teejayevans]

New Administration & Social Security

Just forget the “trust fund” concept and treat it like any other government expenditure .
Problem solved.
Now us spending money like there’s no tomorrow is another issue.

 

[racy]

Contact your federal representatives and let them know your concerns about Social Security: https://www.congress.gov/

 

[donheff]

For bills to pass with a simple majority, typically they have to fall under the budget reconciliation. Changes to SS are excluded from eligibility in reconciliation.

That is the standard approach that has been followed for a while but the rules that determine that are set by a majority vote at the beginning of each new congress. A while back the Dems added some exceptions and then the GOP added more which was why they were so successful at adding judges - no filibuster. The fear (on both sides) is that a party will get so frustrated they will abolish the filibuster entirely and go with straight majority rules. Schumer could do that this week if he could get his entire delegation to go along with him - but he couldn't and won't.

 

[Gumby]

MODERATOR NOTE: As a general rule, we do not allow discussion of legislative proposals until they are actually reported out of the appropriate committees in Congress (you know, the body that actually writes and passes legislation). Otherwise, it is pure speculation and leads to unnecessary arguments. Thank you.

 

[rk911]

If i'm not mistaken, there needs to be 60 votes in the Senate to pass any of those things. That means the plan will have to be supported by both sides so I agree there won't be anything too drastic.

delete...duplicate post

 

[rk911]

I don’t know if that’s true. A lot was passed in the last Congress and there wasn’t 60 votes.

60-votes is currently required for cloture...end of debate. a simple majority passes a bill once cloture is reached

 

[Dtail]

Nothing about the poor shlubs who turned 60 in 2020?

That's me.

 

[Chuckanut]

Nothing about the poor shlubs who turned 60 in 2020?

Oh, they get their FRA raised to 70.

Just kidding.

 

[Gumby]

Oh, they get their FRA raised to 70.

Just kidding.

And they have to come and clean our bathrooms.

 

[mh]

They should just get rid of the yearly cap on contributions