President Biden’s program included numerous proposals that might raise Social Security for some people. But the real topic for those won’t get these benefits for at least ten years is: What will Biden do to guarantee the program’s solvency?
Social Security has started giving out more funds than it is bringing in. The OASI Fund, which gives retirement benefits, has enough to keep benefits through 2034. But longer than that, taxes will only give 76% of the needed funds to keep Social Security afloat.
Biden has not revealed details about his program since he entered the White House. But his team has said this about Social Security: “The Biden Plan will give Social Security a path to solvency by requesting that tax payers with high wages contribute the same taxes that middle-class Americans pay.”
But which people will pay these higher taxes, and will it be enough?
Can a tax increase save Social Security?
Workers give Social Security on their first $142,800 of wages in 2021, though that number rises every year. Biden promised during his campaign not to increase taxes on people making under $400,000, but also said he wanted to enact Social Security taxes on income higher than $400,000.
The program would form what some are calling a “doughnut hole” for Social Security, where wages over $142,800 but below $400,000 are not taxed. But the hole would decrease as the $142,800 cap rises each year.
Biden’s idea would bring in around $740 billion for Social Security over 10 years. The Urban Institute says that, if passed, the measure would extend solvency only by five years.
The truth: Biden’s program would not be enough to fix the problem.
Will Social Security be there for you?
Social Security will not disappear. If nothing changes, S.S. will still give 76% of its needed funds from payroll taxes.
But nothing President Biden is proposing will be the solution. Fixing the problem might require raising Social Security taxes for people with working-class salaries or increasing the retirement age for younger generations.
Even if you believe you will get 100% of your Social Security benefit, it is essential to keep in mind that living only on those checks is very difficult.