“Social Security for Future Generations Act of 2021” Introduced

Nov 15, 2021 / By Elaine Floyd, CFP®

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.

This proposal calls for earnings above $250,000 to be subject to Social Security tax. As the maximum taxable wage base ($147,000 in 2022) rises with inflation in the years ahead, it is expected to reach $250,000 in 2037. At that point all wages would be subject to Social Security taxes. This would have a fairly major effect on restoring solvency.

Other provisions include:

  • Changing the index used for the COLA to the CPI-E from the CPI-W
  • Extending dependent benefits to age 23 if the child is a full-time student
  • Reconfiguring the special minimum PIA
  • Establishing an alternative benefit for surviving spouses of 75% of their joint benefits as a couple

Social Security actuaries have determined that this bill, if passed, would extend the trust fund depletion date by ten years, to 2044. What this bill does not include are the sunset provisions proposed by John Larson in his Social Security 2100: A Sacred Trust bill, which would have extended the depletion date by just four years.

The bill has been referred to the Ways and Means Committee. Like many such bills, it may or may not (ever) come up for a vote in Congress.

You can follow the action here.

As director of retirement and life planning for Horsesmouth, Elaine Floyd helps advisors better serve their clients by understanding the practical and technical aspects of retirement income planning. A former wirehouse broker, she earned her CFP designation in 1986.

 

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