Millions of seniors are going without in retirement—without healthcare, without family vacations, and sometimes, even without prescription drugs—all because Social Security checks are too small. Elizabeth Warren has a plan for nearly everything, including boosting your monthly Social Security check, and checks for future beneficiaries as well.
Elizabeth Warren’s campaign motto is, “I have a plan for that.” One of her most infamous plans is a 2 percent tax on the ultra wealthy: every dollar a person earns over $50 million would have two pennies taxed out of it. Households earning more than $1 billion dollars annually would be taxed at 3 percent. The maximum earnings that can be taxed for Social Security in 2020 is $137,700. Increasing Social Security tax for incomes above this amount could reshape the U.S. economy entirely.
With this money, Warren plans to provide universal child care, tuition-free college, and to increase teachers’ wages across the country. Her plan would also increase Social Security checks by $200 per month for every current and future recipient, adding roughly $2,400 annually.
In addition to these changes, Warren would also update rules to increase benefits for people who receive the smallest checks every month. This includes people who worked in the home during their working years, public servants, widows, seniors of color, and people with disabilities—all of whom are more likely to retire into poverty.
Could her plan work?
Mark Zandi, chief economist of Moody’s Analytics, performed an independent analysis of Warren’s plan and found that it would:
- Immediately lift nearly 5 million seniors out of poverty, cutting the senior poverty rate by almost 70 percent;
- Increase benefits for the lowest half of income-earners by nearly 25 percent; and
- Reduce the federal deficit by more than $1 trillion over 10 years and boost economic growth.
Seniors living in poverty
Last week, the Social Security Administration announced that Social Security checks will increase by 1.6 percent in 2020 for the majority of beneficiaries. However, this is half of the cost of living adjustment (COLA) from last year (2.8), and will add roughly $24 per Social Security check for the average recipient. To put it bluntly, this increase simply isn’t enough for most seniors.
The Part B premium (which has yet to be announced for 2020) automatically consumes about 10 percent of each check for people who receive both benefits. Economic advisors recommend seniors live on about 70 percent of what they earned while they were working. In 2020, however, the average annual Social Security income will be $18,036. For a senior who worked their entire adult life until age 66, this is only about 41 percent of what they need.
Roughly 10 percent of seniors live in poverty, but a much larger number of seniors are just barely getting by thanks to meager retirement savings and social programs like Medicaid and Meals on Wheels. One-third of seniors are dependent upon Social Security to provide at least 90 percent of their income, and over 60 percent use it for at least half of their income.
Why benefits have stagnated
Benefits have stagnated for many complex reasons. One reason is that Congress hasn’t increased Social Security benefits for nearly 50 years despite inflation increasing enormously year after year.
Another reason for meager Social Security benefits is due to the federal minimum wage not keeping up with inflation. The federal minimum wage has not been increased in over a decade, and the entire country is feeling the ripples of this stagnation. The smaller a worker’s paycheck is, the less money there is to tax and put into the Social Security trust fund and other social programs.
What do you think about Warren’s plan? See how much your Social Security check could grow under Warren’s plan using her Social Security benefit calculator.