As the summer of 2023 unfolds, proposed changes to Social Security are set to take center stage. With concerns about a looming deficit and high inflation, lawmakers will be deliberating over the budget proposal to safeguard retirement income for millions of Americans.
What Are the Proposed Social Security Changes?
Here are six significant changes that are likely to be fine-tuned in the coming months because of the proposed Social Security changes, according to GoBankingRates.
Firstly, Social Security payouts received an impressive 8.7% increase this year, the largest jump since the 1980s, in response to soaring inflation. David Berns of Truadvice Wealth Management commended this move, highlighting that Social Security is the only inflation-adjusted investment backed by the U.S. government. The new average monthly payment for all recipients stands at $1,827, representing a $146 increase from the previous average.
President Biden has made a clear commitment to reject any cuts to Social Security benefits. In his 2024 budget proposal, he explicitly stated opposition to such measures, ensuring that any proposals aiming to reduce benefits would be vetoed.
One potential change being debated is an increase in the retirement age. Bipartisan lawmakers are considering raising the full retirement age, currently 66 or 67 depending on birth date, to address the deficit in Social Security benefits. The proposal of raising the retirement age to 70 would lead to a nearly 20% reduction in lifetime benefits.
High-income earners might face higher taxes under the proposed changes. The Biden Administration plans to increase Medicare taxes on individuals earning over $400,000, raising the rate from 3.8% to 5% on income exceeding that threshold. Additionally, a proposed wealth tax aims to levy a 25% minimum tax on individuals with a net worth over $100 million.
Improved customer service is also on the agenda. The 2024 budget proposal suggests a 10% increase, amounting to $1.4 billion, in the annual operating budget of the Social Security Administration. This boost in funding aims to enhance customer service delivery, including increased staffing to handle service requests by phone and email, expedite benefits claims processing, and reduce wait times.
Proposed Social Security Changes
Furthermore, the budget proposal addresses the issue of paid family leave at a national level. It introduces a program administered by the Social Security Administration that provides partial wage replacement for up to 12 weeks, encompassing various reasons such as caring for a new child, a seriously ill loved one, or addressing personal health concerns.
As the 2024 budget proposal sparks debates, these potential proposed Social Security changes will undoubtedly undergo scrutiny in the coming months. For current Social Security recipients, the recent increased payments serve as a preview of further developments that could directly impact their retirement income. It is essential to stay informed and monitor the progress of these proposed changes.