Social Security Legislation Appears To Be Off the Table

May 12, 2022 / By Elaine Floyd, CFP®

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 report, “A Sacred Trust” Would Weaken Social Security by the nonpartisan budget watchdog Committee for a Responsible Federal Budget (CRFB), notes that Larson’s 2019 bill, the Social Security 2100 Act, would have generated enough new revenue to restore solvency for the full 75-year time horizon, primarily by raising the payroll tax rate from 12.4% to 14.8%. Unfortunately, the revised version of the bill, Social Security 2100: A Sacred Trust removes adjustments to the payroll tax rate while adding eight new benefit expansions that would further increase benefits for disabled workers, spouses, young adults, and the very old. To obscure the cost of its benefit expansions, the legislation would set them all to expire after five years. Assuming the five-year benefit expansions are made permanent, as clearly intended, they would consume more than all of the revenue increases and actually worsen solvency.

The CRFB ends its report saying: “Rather than relying on gimmicks and half measures, policymakers should stick to honest and comprehensive trust fund solutions for Social Security. Many options remain available, and our Social Security Reformer allows users to design their own reform plan.”

Read the report 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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