As the 2020 Presidential election approaches next month, the topic of Social Security is a big one for the presidential candidates, President Trump and Former Vice President Joe Biden. Before you cast your vote, here is a breakdown of Joe Biden’s plan for your Social Security. Will seniors benefit from his plans?
Social Security is fundamental to American retirement. Roughly 90% of retirement-age Americans receive Social Security benefits, and one-in-four rely on Social Security for all, or almost all, of their income. The program has not only ensured that middle-class workers can enjoy the sound and secure retirement they worked so hard for, it also lifted over 17 million older Americans out of poverty in 2017 alone.
“For our seniors, Social Security is a sacred obligation, a sacred promise made. The current president is threatening to break that promise. He’s proposing to eliminate the tax that pays for almost half of Social Security without any way of making up for that lost revenue. I will not let it happen. If I’m your president, we’re going to protect Social Security and Medicare. You have my word.”- Former Vice President Joe Biden
Here’s Joe Biden’s Social Security plan:
- Increase payroll taxation on high earners: Biden’s plan is the creation of a doughnut hole that would allow the 12.4 percent payroll tax to be reapplied to high earners. In 2020, all earned income (wages and salary) above $137,700 would be exempt from the payroll tax. Under Biden’s plan, earned income between this payroll tax cap and $400,000 would remain exempt, while earnings above $400,000 would be subject to the payroll tax.
- Boost the special minimum benefit: With the understanding that Social Security is first and foremost designed to provide a financial foundation for low-income retirees, Biden’s plan aims to boost special minimum monthly benefits to 125 percent of the federal poverty line for low-income workers with 10 to 30 years of work history.
- Increase payouts for long-lived recipients: As people age, their out-of-pocket costs for healthcare and transportation services can increase substantially. Under Biden’s plan, beneficiaries between the ages of 78 and 82 would see their primary insurance amount rise by 1% annually until it reached a full 5 percent increase. This would provide aged beneficiaries with a modest benefit increase.
- Switch from the CPI-W to the CPI-E: Lastly, Biden would see to it that the existing inflationary tether, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), is replaced by the Consumer Price Index for the Elderly (CPI-E). Without getting too far into the weeds, the CPI-W does a poor job of tracking the spending habits of seniors, which means cost-of-living adjustments (COLA) tend to be understated. By switching to the CPI-E, the expenditures of seniors, who make up the majority of beneficiaries, would gain more prominence.
Where do seniors stand with Joe Biden?
Joe Biden promises that he would protect Social Security for the millions of Americans who depend on the program, most direly, American retirees. With Social Security’s Trust Fund already in deficit and expected to be exhausted in 2035, he urges the importance of taking action to make the program solvent and prevent cuts to American retirees.
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To know more about Joe Biden’s Plan for Older American’s CLICK HERE.