In a bid to protect and extend Social Security, the U.S Congress has recently reintroduced the Social Security 2100 Act, which could change the retirement experience for 71 million Americans.
The Act, introduced in the House by Rep. John Larson (D-Conn.) in June, followed by a Senate version introduced by Sen. Richard Blumenthal (D-Conn.) on July 22, could see Social Security recipients garnering bigger monthly checks, a more senior-friendly inflation adjustment and stronger protections for low-income retirees under the legislation.
Three Factors Social Security Consumers Need To Know About The SS 2100 Act
What’s in the Social Security 2100 Act and what is the legislation’s chances of passing into law? Here’s what public policy and economic experts think.Expanded access is a key
One primary concern addressed by the bill is what kind of impact it will have on ordinary people—the people who most depend on Social Security. “I know from my law and finance practice that individuals don’t think about their retirement in terms of statistics but in terms of rent money, food, medical services, and health care,” David Gammill, a trial attorney and the founder of Gammill Law Accident & Injury Lawyers, told NTD News.Gammill said he especially approves of the bill’s provisions that steer expanded access into the financial resources of the Social Security program. “That means its benefits, as well as its customer care policy,” he said. “Among the proposals, there is an option of calculating the amount of benefit using the CPI-E instead of CPI-W.”
CPI-E, the Consumer Price Index for Americans 62 and older, is an experimental index designed to reflect older households' spending patterns. It generally gives more weight to medical care and housing, where older Americans tend to spend a larger share of their budgets, and less weight to categories such as transportation.
Historically, CPI-E has tended to increase slightly faster than CPI-W over long periods, although not every year. So replacing CPI-W with CPI-E would generally produce somewhat larger Social Security COLAs over time.
A new $400,000 income threshold
If it clears Congress and the White House, the Social Security 2100 Act would increase the Social Security payroll tax and expand it to cover income over $400,000. That would “shore up its trust fund for another 32 years,” according to The Senior Citizens League, a nonpartisan advocacy organization for U.S. seniors.The bill faces an uphill climb in Congress
Legislative experts say the legislation is a tough sell in Congress, but could be a good starting point for serious Social Security reform. “For starters, GovTrack.US, which tracks federal government legislation, says there’s no chance of the bill passing,” Beth Logan, an accountant at Massachusetts-based Kozlog Tax Advisers, told NTD.Since the legislation could be in trouble well into the next administration, there’s a chance that some similar bill will pass into law. “There are a few other bills out there, including S 4196 which raises estate taxes at the higher brackets, lowers the estate tax exemption to $3.5M, adjusted for inflation, and uses the funds from this to shore up Social Security,” Logan said.
Other experts say that in Washington, D.C, a bill either passes, gets rewritten, or dies in committee. “Either way, I'm telling clients not to bank their retirement plan on Congress's timeline,” Camille Gagliardi, a private wealth adviser and managing partner at Stepping Stone Wealth, told NTD. “If it were up to me, forget the tax cap as the main lever. Instead, tie COLA to a cost index built for seniors instead. That's the change that keeps paying off every year instead of once.”