The latest proposal to be analyzed by SSA’s office of the chief actuary is Angie Craig’s (D-MN) “You Earned It, You Keep It” proposal (H.R. 8717).

Under this bill, starting in 2023 Social Security benefits would no longer be taxed. (Hence the name, “you earned it, you keep it.”) To make up for the lost revenue, transfers from the general fund of the U.S. Treasury would be made to the OASI, DI, and HI trust funds. In addition, payroll taxes—the 6.2% of wages each paid by the employee and employer—would be assessed on earnings over $250,000. This would leave a “donut hole” between the maximum taxable wage base, currently $147,000, and $250,000, of earnings that would not be taxed. Over time, as the average wage index rises, the maximum taxable wage base would eventually exceed $250,000 causing all earnings to be subject to payroll taxes.

House Democrats John Larson of Connecticut and Pramila Jayapal of Washington teamed up on August 15 to wish Social Security a happy 87th birthday and urge action on a bill to expand Social Security. They are hoping that Larson’s bill, Social Security 2100: A Sacred Trust, will come up for a vote as soon as this fall.

Of the several proposals that have recently been submitted to the SSA Chief Actuary for analysis, the Larson bill is by no means the best one, since it extends solvency by only three years, to 2038, due to the sunsetting of several provisions which were designed to get Republicans on board. But Larson, as chairman of the House Ways and Means Social Security Subcommittee, has a lot of clout when it comes to Social Security legislation and would naturally call for action on his own proposal versus the proposals submitted by Bernie Sanders and Peter DeFazio, and others.

Voters in the United States overwhelmingly support Democratic proposals to expand Social Security for all recipients to cover higher costs of living and oppose Republican proposals to completely end the federal program—established during the New Deal era to improve economic security for retirees, people with disabilities, and widows and widowers—before the end of the decade.

Bernie Sanders and Peter DeFazio have introduced the Social Security Expansion Act, which would restore full solvency to the Social Security system by increasing revenues and raising benefits. Under the proposal, payroll taxes would be imposed on earnings over $250,000. A 12.4% tax would be assessed on investment and business income over $250,000 (couples) or $200,000 (individuals), and a 16.2% net investment income tax would be imposed on active S-corporation holders and active limited partners.

The Social Security trustees are projecting an inflation rate of 2.4% under their 75-year, intermediate-cost scenario. According to the 2021 Trustees report (the 2022 edition is due out any day), the combined OASDI Trust Fund will run dry in 2034, after which ongoing revenues will be sufficient to pay about 78% of promised benefits.

With this year’s COLA bumping benefits up by 5.9% and next year’s COLA coming in as high as 7% or 8%, the question arises: will Social Security’s finances worsen as a result of these higher payouts?

A recent report has panned Congressman John Larson’s latest bill to reform Social Security saying it would extend the insolvency date by only four years and that if the provisions were made permanent instead of sunsetting in 2026 would actually move up insolvency by one year.

The Centers for Medicare and Medicaid Services (CMS) has proposed a rule doing away with unnecessary coverage delays following Medicare enrollment. Currently, if a person enrolls in Medicare during the last three months of their Initial Enrollment Period—that is, in one of the three months following their 65th birthday month—Medicare does not become effective until the second or third month after they sign up. If a person misses their initial or special enrollment period and signs up during their general enrollment period from January 1 to March 31, coverage does not start until the following July. Under the proposed rule, coverage in both cases would start the month after enrollment.

The Social Security Administration has announced the resumption of in-person services at local offices starting April 7.

To avoid waiting in line, they strongly encourage people to use their online services or to call and schedule appointments in advance rather than walking in without an appointment.

Offices tend to be the busiest first thing in the morning, early in the week, and during the early part of the month, so clients may want to plan to visit at other times.

Most people have to wait until the annual Social Security Trustees Report is issued—sometime between May and August—to find out how the OASDI trust fund performed the prior year. But if you know where to look (and we do), you can find out as early as March.

If you go to Financial Data for a Selected Time Period and enter the time period you want—calendar year 2021 in this case—you can see how much the trust fund took in, how much it paid out, and the change in asset reserves at the end of the year compared to the start.

Legislation aimed at helping Americans save for retirement is very popular in Congress—as long as it doesn’t address the thorny issue of Social Security solvency.

A new bill that has broad bipartisan support and appears close to passing would expand on 2019 legislation designed to help more people save for retirement. The current bill would require most employers with 401(k)-type plans to automatically enroll employees unless they opt out, sweeten tax credits for startup firms that offer workplace savings plans, promote a benefit for low-income savers, increase catch-up contributions for people in their 60s, and loosen rules to allow more annuity options. It would also raise the RMD age from 72 to 75.

Social Security field offices are scheduled to remain closed through the end of March. Meanwhile, mail is piling up and telephone wait times are excruciating. Between Covid disruptions and budget cuts, service at SSA has never been worse. Thankfully, SSA’s automated systems seem to be working, and clients who apply online for benefits are having no trouble. But widows, who must apply for survivor benefits in person, are facing delays, as are disability applicants and anyone else with an unusual question or request.

This is your chance to tell the advisory community which software tools you like the best. Naturally we are hoping you’ll help make Horsesmouth’s Savvy Social Security Planning Calculators stand out in the Social Security category. In last year’s T3/Inside Information Advisor Software Survey we scored high, but this year should be even better as the very robust capabilities of our calculators become more well known.

The CDC caused a bit of a stir in July 2021 when it announced that life expectancy in the U.S. declined by a year and a half in 2020, primarily due to the pandemic. This was the largest one-year decline since World War II, when life expectancy declined 2.9 years between 1942 and 1943.

According to the CDC, life expectancy at birth is now 77.3 years. At age 65 life expectancy is 17.4 years for men (to age 82.4) and 20.1 years for women (to age 85.1).

The Center for Retirement Research at Boston College just completed a three-part series on the needs and resources available for long-term care.

The first study examined the odds of a 65-year-old developing minimal, moderate, and severe needs, considering both the intensity and duration of the required care. The results show that roughly one-fifth of 65-year-olds never require long-term care and about one-quarter will have severe needs, with the rest falling somewhere in between.

The Medicare Part B base premium will be going up by 14.5% to $170.10 in 2022. All of the IRMAAs will increase as well, however the income levels will be adjusted for inflation and will start at $91,000 for individuals and $182,000 for couples. The annual deductible will be going up by $30 to $233. Here’s the explanation according to CMS.

When it rains it pours. After a long dry spell of Congress pretty much ignoring Social Security despite repeated annual calls by the trustees to pass legislation to restore solvency to the system, there has been a flurry of new bills in the House. On October 26, 2021, Rep. Al Lawson (D-FL) introduced H.R. 5737, Social Security for Future Generations Act of 2021.

The Justice Department and the Social Security Administration have dropped two Trump-era appeals that attempted to deny survivor benefits in cases where couples were either not permitted to marry or not legally married the required nine months even though they had been together for decades. This opens the door to survivor benefits for many people who thought they would be denied such benefits due to SSA’s strict interpretation of its marriage requirements.

Every year since 2014, John Larson, a Democratic representative from Connecticut, has introduced some version of the Social Security 2100 Act. I’ve always considered it a good bill, with something for everyone. In addition to a few tweaks here and there that raised benefits for everyone by a small amount and changed the index used for the COLA, its most important provision called for a gradual raising of the payroll tax, to 7.4% from the current 6.2%, to restore solvency to the system. In September 2019, SSA actuaries determined that if passed, benefits could be paid in full over the next 75 years and the trust fund would never run out.

As everyone has heard by now, the Social Security cost-of-living adjustment for 2022 will be 5.9%. Everyone currently on Social Security will receive a letter in December telling them what their new benefit will be starting in January. Those who haven’t started benefits yet will also have their PIAs raised by the COLA. Make sure your clients understand that they do not need to claim benefits now to get the COLA. (We’ve received a number of questions about this.)

SSA has recently redesigned its statements to show benefit estimates at each age from 62 (or the client’s current age if over 62) through age 70. For clients born in 1955 through 1959, whose FRAs are 66 plus some number of months, the statement shows the estimate for FRA (e.g., 66 and 6 months) as well as age 67. In a few (not all) of the cases that we’ve seen, these amounts are the same. Clearly, they should not be. Each month a client delays application, the benefit amount goes up by a few dollars. (See references at the end for the exact formula.)

In addition to this error, we are seeing mistakes in the DRCs (delayed retirement credits) between FRA and age 70. For example, one statement showed a benefit of $3,223 at 68, $3,459 at 69, and $3,773 at 70. Instead of going up by 8% a year, the benefit went up by 7.3% between 68 and 69 and 9.1% between 69 and 70.