New Administration’s Social Security Plans: 3 Projected Changes That Could Affect Your Benefits
New Administration’s Social Security Plans: 3 Projected Changes That Could Affect Your Benefits. Now that Republicans hold a majority in Congress and the Senate and are running for president, Social Security’s future is far more precarious than it was. Although Social Security, which offers financial stability to millions of retirees, disabled people, and survivors, is one of the most popular programs in the nation, particularly among their demographic, the movement to dismantle it has been going on for a while. This political party is not known for its love of public assistance programs.
Since the tide hasn’t changed yet and the Republican Study Committee (RSC) has already put forth a budget that calls for $1.5 trillion in cuts to Social Security, this time will actually be no different. There is now a much greater chance that these reforms will pass both chambers and become law. Among the suggested modifications are:
Raising the Retirement Age
Over the past few years, this has been one of the most recurrent Republican initiatives. Since the Social Security Collapse in the 1980s, the full retirement age has been gradually rising, and for individuals born in 1960 or after, it is currently 67 years old. According to the idea, raising it even higher—to 69 years old—would ease the burden on the Social Security Trust Fund.
The U.S. Senate Committee on the Budget (COB) swiftly refuted this theory, concluding that raising the retirement age would not alter the year Social Security is expected to go bankrupt and that, as is customary, this policy change would disproportionately affect low-income retirees, who must continue to work until they reach full retirement age and occasionally beyond.
The Republican party argues that a higher retirement age will extend the program’s viability by reducing the number of years benefits are paid out. However, since the program will still experience a shortfall, a better solution should be prioritized.
Modifying the Cost-of-Living Adjustments (COLA)
Despite being a bipartisan plan, it should come as no surprise that both parties have opposing views on this matter. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to determine the COLA, which is intended to assist persons who receive Social Security benefits in keeping up with inflation.
This index provides a percentage increase that is applicable to all advantages and weights weight categories. The Chained Consumer Price Index (C-CPI), which often grows more slowly than the CPI-W, is the index that Republicans would like to replace this one.
They contend that the C-CPI more effectively captures inflation and shifts in consumer behavior, and that because of its slower rise, it would also lead to a lower COLA and, hence, a smaller distribution of benefits.
Many recipients who are already having financial difficulties could become financially incapacitated as a result of this. The Consumer Price Index for the Elderly (CPI-E), which examines expenditure among those 62 and older and has grown even faster than the present CPI-W, is actually what Democrats and senior advocates want to replace the index with. Beneficiaries would have more money to spend, but the program would go bankrupt sooner.
Means Testing for Social Security Benefits
A proposed reform known as “means testing” would modify Social Security benefits according to a person’s assets and income, which might result in lower or no benefits for retirees with greater incomes. Regardless of a person’s retirement funds, benefits are now decided by their earnings history and contributions made throughout their working years. Supporters contend that means testing might increase the program’s solvency and allocate funds to people who are more in need. However, some argue that it compromises the universality of Social Security and could deter people from saving for retirement.