Increased Benefits Come With Social Security Expansion Act
by David Kelly August 7, 2022
Inflation has been taking its toll on retirees, especially those who rely solely on Social Security. But have no fear, Senator Bernie Sanders (I-Vt.) and seven Democratic cosponsors recently introduced S. 4365, the Social Security Expansion Act, a bill to enhance Social Security benefits and ensure the long-term solvency of the Social Security program.
If this bill passes, retirees 62 and over would start to receive an additional $200 a month in benefits beginning in January 2023. Most retirees rely heavily on Social Security benefits, and for some it’s their only source of income.
Currently, Americans will stop receiving their full Social Security benefits in about 13 years if Congress doesn’t act to address the pending shortfall, according to an annual report released in June by the Social Security and Medicare trustees. In other words, monthly benefits will dramatically decrease to all by 2034. At that time, the fund’s reserves will be depleted, and payroll taxes will only cover 77% of benefits owed. About 56 million people received these benefits in 2021.
With this new legislation all may not be lost, as the new bill aims to ease seniors’ financial strain by boosting each recipient’s monthly check. The average monthly Social Security check is about $1,658, meaning a $200 increase would represent a 12% boost. This year’s Social Security Cost-of-Living Adjustment (COLA) of 5.9 percent is based on inflation figures from 2021. But since then, inflation has pushed well above nine percent, meaning Social Security recipients today are actually losing money.
“Many, many seniors rely on Social Security for the majority, if not all, of their income,” said Martha Shedden, president of the National Association of Registered Social Security Analysts. “$200 a month can make a significant difference for many people.”
How will Congress ensure that Social Security will be able to increase benefits and stay solvent for years to come? If you guessed increasing payroll taxes to cover the costs, then you guessed right. According to the bill’s sponsors, the proposed changes will be made possible by raising taxes on people who earn more money per year.
Today Social Security taxes are set at 6.2 percent for employees and employers. This figure is for each, not for both combined. Self-employed workers pay a higher tax rate of 12.4 percent. As the maximum taxable salary is $147,000, the maximum tax payable is therefore $9,114 each for employee and employer, with the self-employed paying up to $18,228 per year.
The bill proposes to increase the maximum taxable salary for Social Security, adding funding by applying the Social Security payroll tax to all income below $250,000. Currently, earnings above $147,000 aren’t subject to the Social Security tax. An additional proposal would be to base the annual COLA on the Consumer Price Index for the Elderly (CPI-E) instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
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https://thenewamerican.com/increased-benefits-come-with-social-security-expansion-act/
