There are 3 changes in Social Security that the U.S. President wants to be approved in 2023. These changes are believed to finance the program better and improve its current benefits, says Berkowitz.
According to Berkowitz, the Social Security benefits are already starting to decline. All of these benefits are predicted to be consumed by 2023. And in the next 12 years without any changes for the better, the retirees could expect a significant cut to their benefits. Accordingly, U.S. President Joe Biden is working to make changes that will finance the program better and improve its current benefits. However, many do not believe that these changes are sufficient enough to sustain the rising costs of living.
The Social Security Administration (SSA) collects its funds from payroll taxes. The concept of this program is that individuals and employers will pay Social Security taxes while still young and working full-time. Once they are already close to retiring, they can collect these benefits back. However, there is a limit on how much of an individual’s income can be taxed. To date, the payroll taxes are no longer enough to cover benefits. Democrats suggested an increase in the amount of an individual’s income that can be taxed to $250,000 or more. This suggestion seemed to be supported by Biden.
Every year, the SSA includes a cost-of-living-adjustment (COLA) to Social Security benefits. These benefits are based on inflation and aims to help retirees avoid losing purchasing power as the cost of living rises. To date, the COLA is calculated by using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, many argue that CPI-W does not actually represent common expenses that many older Americans have. Biden also supports the suggestion to calculate COLA using the Consumer Price Index for Americans 62 years of age and older (CPI-E) instead. This is because, according to the majority, most beneficiaries do not claim Social Security benefits until the age of 62.
The SSA also provides a special minimum benefit for individuals who earn low income. To be eligible, a retiree must have worked for at least 11 years and earned no less than $17,820. To date, Biden aims to improve the benefit by giving workers with at least 30 years of coverage and a benefit of nothing below 125% of the poverty level. However, the qualifications for the program have changed over the years. As a result, the special benefit became difficult to qualify for.