Lawmaker Pushes for More Social Security Income After the Largest Raise in Decades
Retirees will receive Social Security Cost of Living Adjustment (COLA) that will increase by 5.9% in 2022. COLA is a benefit increase seniors receive to prevent losing buying power due to inflation. Seniors will receive one of these adjustments for each subsequent year when the consumer price index shows prices are rising.
In recent decades, retirees have seen the largest COLA bump ever, but one lawmaker believes that even such a large benefit boost won’t ensure that older Americans won’t face financial hardship. In a new proposal, Rep. John Larson (D-Conn.) proposes to increase seniors’ benefits immediately as well as to change the way COLAs are calculated in the future.
What is important to be known about Rep Johnson’s proposal?
Larryson published the latest version of Social Security 2100 recently. According to him, the new proposal is meant to combat the fact that retirement benefits have lagged behind inflation and that millions of seniors still live in poverty. If signed into law, the Social Security 2100 Act would:
1. Instantly upgrade Social Security benefits by 2 percent for new and existing beneficiaries: In addition to the 5.9% COLA due in 2022, this boost would ensure that seniors receive more ensured income in retirement.
2. Remaking the COLA formula: Today, the cost of living adjustment for senior workers is often linked to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The legislation will rewrite this to utilize a varied index, labeled the Consumer Price Index for the Elderly (CPI-E). This traces price shifts much better causing senior workers to be experienced as retirees hold distinctive spending patterns than clerical employees and urban wage earners.
3. A new minimum benefit must be set: There are benefits minimums for Social Security, but they are outdated, and no new retired persons receive them because they are so far behind the times. Under the act, a new minimum wage of 25% above poverty would be established and tied to wage growth to guarantee it never falls below the poverty threshold again.
As part of the Social Security 2100 Act, wealthy Americans would be taxed to fund these reforms and shore up the existing Social Security trust fund. Presently, every American citizen pays Social Security taxes on earnings almost a “wage base limit,” which is established at $147,000 in 2022.
There is also a new tax payroll given out by the legislation on earnings higher than $400,000, however, it will not make retirement benefits higher for individuals who will make be taxes payment.
Uncertainty has sureeloped around if the proposal would be accepted or voted for by congress. It is believed that the passing of the bill further will be more difficult.
However, similar proposals have been brought about by President Joe Biden while campaigning. As such, there is still a good chance the bill will be backed by serious effort in the law. The stakes for the bill to be passed can get higher if Democrats secure the power of Congress or improve their numbers after the coming 2022 election.
Future retirees and current retirees should keep an eye on its progress. If they believe retirees are in need of more help in achieving financial security in their later years, they should contact their members of Congress in support of the legislation.