Social Security Changes Under Biden Administration
If President Biden can improve our Social Security system, which is clearly in trouble, that could very well be the biggest achievement by a President in a long time.
Social Security is in trouble. We discussed this at length in this podcast “Social Security & Medicare Bankrupt in 2035” from the summer of 2019. Simply put, Social Security is running out of money. There are more outflows from the fund than inflows.
What can be done to fix this problem? Some common solutions that have been proposed for decades:
- Raise the amount of wages subjected to Social Security taxation
- Raise the tax rate for Social Security
- Increase the Full Retirement Age
- Privatize Social Security
- Adjust benefits and payment scales/timing
While these suggestions are not new, they are often polarizing. Usually there are politicians for one, but not the other. It seems like in order to get anything done, a combination of these changes are needed simultaneously.
Because any of these changes is likely to annoy one particular party and please the other, past Presidents have mostly avoided addressing the problem. However, that may be about to change with President Biden.
Biden is in the position where his political party controls both the House and the Senate (somewhat). That means he has the most open path toward real Social Security reform. Considering how important this issue is to our nations future, it seems reasonable that there would be bipartisan support to fix the problem now.
When Biden was running for President, he did indicate he would be interested in certain changes. Some of the Social Security changes he mentioned on the campaign trail were:
- Raising the minimum Social Security benefit to 125% of poverty
- Increase Social Security payments by 5% for people who have been receiving payments for 20 or more years
- Changing the cost of living increase to be based on the Consumer Price Index for the Elderly (CPI-E)
- Begin taxing wages above $400,000 for Social Security (current limit $142,800)
Initially, it seems that Biden would actually INCREASE costs of the program, but that last bullet does address the need to increase Social Security inflows.
These were just talking points during an election process and not actual legislation up for vote. However, the ideas do combine into changes that could be meaningful. By increasing benefits while also increasing taxes, Biden could offer a change to Social Security that both political parties could get behind. It seems clear that bipartisan support for a program large and important as Social Security just makes sense.
When would this happen?
Any change to Social Security can not be taken lightly, but a major overhaul like the proposals above would take some effort. Yet, considering the makeup of Congress and the need to fix the problem sooner than later, perhaps Social Security will be fixed in 2021! Well, at least temporarily fixed….
Social Security needs to be fixed. It is broken and could soon collapse due to lack of funds. President Biden has the opportunity to fix Social Security and secure his legacy in history. He could kick the can as past Presidents have, or he could use his party’s political power in Congress to make changes now. If he approaches both sides of the Social Security equation (inflows and outflows) he has a reasonable chance to make lasting change.
Thanks for listening to Dolphin Financial Radio based in the Clearwater, Tampa area.
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About The Author
Dolphin Financial Group
Daniel J. Wendol is the owner of the Dolphin Financial Group. He is a CERTIFIED FINANCIAL PLANNER™, licensed as an Investment Advisor Representative, and also has an insurance license. He combines the investing and insurance worlds with a focus on retirement. ‘ Each week Dan hosts Dolphin Financial Radio, a podcast about the wide-ranging issues people face leading up to and through retirement.