October 28, 2020 — Perhaps you have already voted in the U.S. Presidential election. If so, congratulations on fulfilling an important responsibility of citizenship. But if you haven’t voted yet here are some facts, as best we can determine, to help you understand where the two presidential candidates stand on the future of Social Security, one of the most important issues for current and future retirees. For this article we have relied mainly on an excellent article on NextAvenue.org, “What Biden’s Plans Mean for Social Security“.
The nonpartisan Urban Institute think tank analyzed Biden’s plans for Social Security in that article. They concluded that his plan could “close about a quarter of Social Security’s long-term financial shortfall”, which as currently projected would reduce promised benefits by slightly more than 20% in 2035.
- Earnings over $400,000 would be subject to payroll taxes, but maintain the 2021 threshold of $142,800 for other workers. The Urban Institute says this would boost Social Security revenue by 7% in 2021.
- His plan would put some of that extra revenue into higher minimum benefits, and the rest to reduce the SS deficit.
- He would change the COLA to one used for the elderly, which would increase it by about 0.2% a year.
- Other minor changes to improve benefits for children and lower earning workers
The Urban Institute concluded this about Biden’s proposals: “Future tax increases or benefit cuts would likely be needed to balance the program.”
- The President has not announced any specific details about protecting Social Security. When the AARP recently asked the President how he would ensure Social Security benefits, President Trump said: “We’ll never cut Social Security, and you can rely on that…We will guard it with everything we have.”
- He signed an executive order in 2020 suspending through Dec. 31 the payroll taxes which fund Social Security for employees earning $100,000 and less. Some experts believe that although this will help put more money in working people’s pockets during the pandemic, if those taxes are not repaid it could make Social Security’s 2035 deficit even worse.
- Regarding how to make up the looming SS deficit, Treasury Secretary Stephen Mnuchin, the head Social Security Trustee, said that the administration planned to pay for Social Security by using dollars “from the general funds.” There have been conflicting statements regarding his intention of eliminating Social Security payroll taxes.
In the remaining days of the campaign it is clear that Joe Biden has a more detailed plan to save Social Security. Whether he is elected and it is signed into law has yet to be decided. The President has repeatedly said he will never cut Social Security, although he has never expressed how he would do that. The only action he has taken in that regard (pausing payroll taxes) has some experts worried it will make the problem worse.
By next January we will see which, if any plan goes into place. We hope you find this information useful in your voting decision.