What’s Changing? 3 Projected Social Security Benefit Adjustments Under the New Administration
The prospects for Social Security are even more precarious than they were before, given that Republicans are now poised to take control of the presidency, as well as the majority in both the House of Representatives and the Senate.
Even though Social Security, which offers financial security to millions of retirees, disabled individuals, and survivors, is one of the most popular programs in the country, particularly among their demographic, this political party is not known for its love of public assistance programs.
However, the movement to dismantle Social Security has been going on for a considerable amount of time.
The tide has not yet shifted, and the Republican Study Committee (RSC) has already produced a budget that intends to slash Social Security by $1.5 trillion.
In point of fact, this time will be no different than the years that have come before it.
With the passage of these amendments through the chambers and the subsequent signing into law, the likelihood of them becoming law has significantly increased. There are a few adjustments that have been suggested:
Raising the Minimum Age Required to Retire
Throughout the course of the last few years, this has been one of the most consistent proposals put up by Republicans. Individuals who were born in 1960 or later are now eligible to retire at the full retirement age of 67 years old.
This age has been gradually growing since the Social Security Collapse in the 1980s. Increasing it even further, to 69 years old, is the proposal’s belief that it would reduce the financial strain that is currently being placed on the Social Security Trust Fund.
This theory was quickly debunked by the Committee on the Budget of the United States Senate, which discovered that raising the retirement age would not affect the year that Social Security is projected to become insolvent.
Furthermore, as is customary, this policy change would have a disproportionately negative impact on retirees with low incomes, who are the ones who are required to continue working until they reach their full retirement age and sometimes even beyond.
This extension is justified by the Republican party, which claims that increasing the retirement age would limit the number of years that benefits are paid out, so extending the program’s solvency.
However, given that the program will experience a shortfall regardless of the strategy that is implemented, a more effective approach need to be prioritized.
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Making adjustments to the Cost-of-Living Adjustments (COLA)
It should come as no surprise that both sides of the aisle take opposing positions on this matter, despite the fact that this idea is supported by both parties.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is required in order to calculate the cost-of-living adjustment (COLA), which is intended to assist those who are receiving Social Security benefits in keeping up with the rate of inflation.
By assigning weights to different categories, this index provides a percentage increase that is applicable to all categories of benefits.
However, Republicans would like to see this statistic replaced by the Chained Consumer Price statistic (C-CPI), which is known to have a growth rate that is normally lower than that of the CPI-W.
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.
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Social Security Benefits Means Testing
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.