4 Social Security Shakeups That Could Hit Your Wallet After the 2024 Election
Written by
Josephine Nesbit
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Social Security and where each 2024 presidential candidate stands on how to fix the program could sway voters who are concerned as to whether they will even be able to collect a monthly check when the time comes for them to retire.
According to the latest trustee reports for the Social Security and Medicare trust funds, Social Security’s trust funds could run empty by 2034 unless Congress takes action to shore up the program’s finances. While Democrats and Republicans vow to protect benefits, experts say we need to address these problems now.
“The longer we push this out, it becomes more difficult to try to protect everyone that receives the benefits,” Tax Foundation economist Alex Durante said to CNBC. “It’s important that we tackle this sooner rather than later.”
One suggestion has been to raise the retirement age to 70 from 66 to 67. Advocates for raising the retirement age say that people in the U.S. live longer, but this isn’t necessarily true for the bottom half of earners. Raising the retirement age would also cut benefits for all new retirees, disproportionately harming lower and middle-income beneficiaries, says the Center on Budget and Policy Priorities.
Another possibility is to raise the income cap to $250,000 or more or eliminate it altogether. Currently, those earning over the cap pay a Social Security payroll tax rate of 1% or less, as previously reported by GOBankingRates. Those under the cap pay up to six times more.
Increasing the payroll tax rate from 12.4% to 15.6% is another common suggestion, but former Cranston, Rhode Island, mayor Steve Laffey plans to enter the presidential race with his own plan.
Instead of tax increases or benefit cuts, Laffey wants to gradually phase out the FICA tax completely, CNBC reported. Workers and employers each pay 6.2% on up to $160,000 in wages toward Social Security. This would be replaced by new Personal Security System accounts where workers would contribute 10% of their pay. These funds would be invested into a weighted index of global stocks, bonds and other securities, CNBC adds.
“It’s a modern version of Social Security,” says Laurence Kotlikoff, a Boston University economics professor who devised the plan.
This would give beneficiaries a bigger return on their investment and aim to address the program’s current inequities, says CNBC. The government would make matching contributions for lower earners, the disabled and the unemployed.
Laffey says that a 20-year-old worker in 2025 could eventually get $10,000 per month rather than $2,000.
Whatever happens, CNBC noted that experts agree that we need bipartisan compromises on benefits and taxes.
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