$485 Social Security INCREASES – Biden’s Four-Point Plan – SSI SSDI SSA VA Low Income 2023
Big changes in Biden’s four-point plan for Social Security. And this includes $485 increases to special minimum benefits, cola adjustments, taxation changes, PIA adjustments. So if you’re somebody that collects Social Security regardless of if it’s retirement, SSI, SSDI, veterans benefits, any of these fixed income benefits from the Social Security Administration, you’re gonna want to read this topic all the way through. I’m to be covering the details of what’s included in this four-point plan.
There are big changes happening right now, summer of 2023 for Social Security. Biden’s four-point plan how the proposal on Social Security changes impacts to you. And it says, like many US.
Lawmakers, President Joe Biden wants to fix Social Security before the program’s old agent Survivors Insurance Trust runs out of money. And we’ve heard we’ve got roughly about a decade left before we have a solvency issue in which we’re hearing there’s going to be cuts across the board to benefits of 20% to 25%, which means if you collect $1,000 per month right now from Social Security, you’ll suddenly get a check of about $750 to $800. And when you say, what happened to my money? They’re simply going to say, sorry, we just don’t have enough money to pay you full benefits. It’s happening to everybody across the board.
That could happen within the next decade, leaving Social Security solely dependent on payroll taxes, which currently covers only about 77% of benefits. Now, Biden has proposed a four-point plan to boost the program that would mostly impact high earners and company executives who tend to have much bigger retirement savings accounts than the typical American. Among other things, the Biden plan would raise the income threshold of wages subject to Social Security payroll tax. Although these ideas have gained the support of many Democrats and senior advocates, doubts have been raised about how effective they will be in fixing Social Security’s long-term funding. Now, let’s take a look at this four-point plan and what it includes.
First, tax-earned income above $400,000, leaving wages between $160,200 and $400,000 untaxed. Currently, any wages above $160,200 are not taxed. So right now if you’re working and earning income every year and you make less than $160,200, 100% of your income is taxed for Social Security. And what they’re saying is why is it that somebody that makes hundreds of millions of dollars paying the same into Social Security as somebody that makes 160,000 and they’re saying we need to make sure that the high-income earners start paying more into Social Security. So they’re saying $160,200 and less is taxed, but then $400,000 or more needs to be taxed as well.
And so there’s a gap there, there’s a hole between $160,200 and $400,000 where there will be no taxes but they’re saying over time they will close that gap. So that way we can start to pour in more and more to Social Security’s funds to be able to sustain and pay out benefits to recipients. Number two, change the calculations for determining the annual Social Security cost of living adjustments or the Colas, which is the annual increases that recipients get to keep up with the pace of inflation. And last year it was at a 40-year high with an 8.7% increase, which a lot say roughly came out to an average increase of about 100 and almost $50 per month for most recipients. Now it wasn’t that amount for everybody but it was an 8.7% increase across the board.
Now they want to change these Cola increases so they are no longer based on the Consumer Price Index for Urban Wage Earners and Clerical Workers or CPIW. Biden favors basing the Cola on the Consumer Price Index for the elderly or the CPIE. As they’re saying, the vast majority of recipients are the elderly. They’re retired and they spend their money differently and they have different priorities. So therefore, in order for us to make sure that they’re getting the money that they need, we should base it upon their spending habits, not those that are working and earning incomes.
Number three, raise the primary insurance amount or the PIA, or the PIA age that determines how much money you’ll receive in Social Security benefits so they want to adjust that age. And also we’ve heard that there could be indirect cuts to Social Security as well. And I know it can get confusing because we have proposals for increases and proposals for cuts but they’re saying they want to raise the full retirement age as well. So that way people don’t get full benefits until about 69 or 70. In a recent proposal. If you missed that topic you’re going to want to check it out next as I just did an update that was just released last week as well. And now for the big one increases and raises to the minimum benefits. Take a look. Number four raises the special minimum benefit for lifetime lower-wage workers to 125% of the federal poverty level for Social Security beneficiaries. Now let’s go ahead and take a look at this very quickly so I can show you exactly how this equates to $485.
Now currently at this time, what you’ll see for 2023 is that the special minimum benefit is 1033 dollarsfifty cents per month. Now what they’re saying is they want to increase that to 125% of the federal poverty level. So that is going to be a base increase. And at this present time, you can see 125% of the 2023 federal poverty level is $18,225 annually, which equates to $1,518.75 per month. Which means if this fourth point in Biden’s plan is implemented that we would see an increase of that special minimum benefit across the board of $485.25.
Now the question remains, will this pass? Now what’s interesting is we actually do have bipartisan support. Republicans and Democrats alike agree Social Security reform is necessary because if we do not, like we mentioned, there’s going to be a solvency issue. However, in its current form, take a look at this. The Republican led us.
House is unlikely to support the plan in its current form, experts say. Even if it does pass, some observers question how effective it will be in fixing Social Security. So we are going to see reform. There is bipartisan support to make changes. But Biden’s current four-point plan, will it be passed?
Chances are in its current form, very unlikely. It will probably pass in some modified version. However, take a look at this. Very interesting. They’re saying, based on calculations of his plan, they’re not sure that it’s going to be enough.
As the Motley Fool recently reported, the plan sounds great on paper partly because Social Security would bring in extra revenue, and that revenue could help fuel higher annual Colas. An analyst from the Social Security Administration’s Office of Chief Actuaries estimates that exposing all earned income to payroll taxes would extend the solvency of the trust fund by an additional 35 years. However, Biden’s additional proposal to bolster the Cola payments so those increases, those raises to the special minimum benefits and the raises to the PIA for Age beneficiaries negates the bulk of the revenue from reinstating the payroll tax on the rich Motley Fool reports. So they’re saying it’s good that we’re going to be increasing the income for Social Security through taxation. But in addition to that, with the raises, the benefits, the increases that will go out, we’re also increasing the amounts that go out and they actually offset each other.
So we’re not really getting any traction in the fight against solvency and they still have got to figure things out. Now in addition to that, there are changes taking place right now, as I mentioned, summer of 2023. And I will also keep you up to date on everything that’s unfolding right now with Social Security. As we’ve heard, 2023 is the year of Social Security reform.
I will catch you on the next topic. Take care.