Social Security update: Lawmakers’ new plan would expand benefits by $2,400

Some members of Congress are pushing for a new law that would expand Social Security benefits by $2,400 annually.

The bill, the Social Security Expansion Act, would also ensure the program is funded for the next 75 years by applying a payroll tax on higher-income workers.

Why It Matters

Social Security faces a funding crisis that could see the Social Security Administration run out of money for full payments by the mid-2030s.

Millions of Americans rely on the program to fund the bulk of their retirement, but seniors have complained in recent years that the benefits’ cost-of-living adjustment doesn’t adequately reflect inflation.

Across the board, seniors are facing higher costs for groceries, housing and health care.

What To Know

Independent Senator Bernie Sanders of Vermont, Senator Elizabeth Warren, Democrat from Massachusetts, and Democratic Representatives Jan Schakowsky of Illinois and Val Hoyle of Oregon introduced the bill on Thursday in an attempt to increase benefits for millions of Americans.

The act calls for Social Security benefits to rise by $2,400 per year and would be fully funded for the next 75 years through application of a payroll tax on all income above $250,000.

That means only 9 percent or less of American households would see taxes increase in order to fund the higher benefit amount and ensure funds for the next 75 years.

At the moment, nine other Democratic senators and 17 House members have cosponsored the bill.

Before Social Security was created by President Franklin D. Roosevelt in the 1930s, around half of all seniors lived in poverty. Today, the senior poverty rate is down to 9.7 percent, thanks in large part to Social Security payments, according to the lawmakers.

The average Social Security payment is $1,838 per month, with nearly 40 percent of seniors relying on it for a majority of their income. One in seven count on it for more than 90 percent of their income.

What People Are Saying

Sanders said in a statement: “At a time when nearly half of older Americans have no retirement savings and over 26 percent of seniors are trying to survive on an income of less than $17,500 a year, our job is not to cut Social Security as many of our Republican colleagues want to do. Our job is to expand Social Security so that every senior in America can retire with the dignity that they deserve and every person with a disability can live with the security they need.”

He added: “Right now, a billionaire pays the same amount into Social Security as someone who makes $176,100 a year. Our bill puts an end to that absurdity. And by doing that, we can expand Social Security benefits and make sure that Social Security can pay out every single benefit owed to every eligible American for the next 75 years.”

Warren said in a statement: “Social Security serves as a lifeline for millions of seniors, and hardworking Americans deserve to receive the benefits they paid into. It’s a mistake for Donald Trump and his allies in Congress to focus on securing tax cuts for billionaires and large corporations when we should be focusing on expanding and increasing Social Security benefits so that everyone can retire with dignity.”

Kevin Thompson, finance expert and founder/CEO of 9i Capital Group, told Newsweek: “”Honestly, I’ve always thought there was an obvious solution here—one that doesn’t put additional tax burdens on lower-income individuals. And now, it looks like Congress is finally considering an approach that has been staring them in the face for years.”

Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Social Security is going to be at the center of some of the most important financial discussions on Capitol Hill in the coming years, primarily due to increasing concerns over the program’s solvency… While we certainly need more proposed solutions to Social Security’s solvency problem, it’s unlikely this one will gain much traction. With most of its backing coming from Democrats, and Republicans looking to find cuts instead of increased funding, the likelihood of both sides finding equal ground and passing this legislation seems virtually non-existent.”

Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek: “The extra $2,400 a year would be huge for many seniors living on fixed incomes. For a lot of retirees, Social Security is their main (or only) source of income, so this boost would provide meaningful relief.”

What Happens Next

If the bill gets passed, the Social Security trust fund could have more stability in the years to come, Thompson said. “Overall, I see this as a positive step toward securing Social Security for the long term. But will it pass? That’s another story. With Republicans focused on their spending bill and expanding tax cuts—not raising taxes—it’s far from a done deal.”

Ryan echoed this sentiment: “The political landscape is beyond divided right now. This proposal has strong support among progressives who see it as addressing both the solvency issue and senior poverty… There might be more common ground on specific elements (like addressing certain offset provisions), but the comprehensive package as described would unfortunately face an uphill battle in the current political environment.”