Comparing The Two Social Security Reform Proposals

We're doing a side by side comparison of two Social Security proposals that are quickly gaining steam. One already has enough sponsors to clear the House and the other is from a 2020 presidential candidate. Which one is better?

We’re doing a side by side comparison of two Social Security proposals that are quickly gaining steam. One already has enough sponsors to clear the House and the other is from a 2020 presidential candidate. Which one is better?

Within the past few weeks, there has been two big proposals for Social Security reform. There’s the Social Security 2100 Act, sponsored by rep John Larson, and the Social Security Expansion Act from Senator Bernie Sanders.

Similarities Could Make It Easier To Get The Votes

What’s interesting is that these proposals are very similar in a lot of areas. Furthermore, one is from a Congressman and one is from a Senator. I think it’s likely that these two proposals could be companion legislation which could make it easier to get to a vote in the Senate should it pass the House. So today I want to compare the most notable parts of these proposals side by side and see how they differ. 

Cost Of Living Inflation Measurement

The first thing is the change to how the cost of living adjustments are calculated.

Currently the SSA uses the CPI-W. There is a another inflation measurement that isn’t official, but the Bureau of Labor statistics has been updating it for some time on an experimental basis. It’s called the CPI-E and is meant to track expenses for households where at least one member is 62.

BOTH bills propose switching to the CPI-E.

Increase To Minimum SS Benefit

Then there is the increase to the minimum SS benefit.

If an individual worked for at least 30 years, their benefit couldn’t be lower than 125% of the poverty level for a single individual.

This change is suggested by both proposals.

Combining Both Trust Funds

The next change is to combine the two SS trust funds into one trust fund.

Currently, there is a trust fund set up for retirement and survivor benefits, known as the old age and survivors insurance fund or OASI and then there is the disability insurance fund, known as DI. When you pay your 12.4% SS taxes, 10.6% goes to the retirement and survivors fund and 1.8% goes to the disability fund.

SIDE NOTE: Unless you’re self employed, you only pay ½ of that and your employer pays the other half.

The rational behind combining these is that even though these two trust funds are already collectively referred to as the OASDI fund, there are arguments among the politicians when transfers need to happen between the funds. Combining these would simplify the accounting. Both plans have an across the board benefit increase built in. This increase would be a SS formula change that would be a bigger benefit for low income individuals.

Increase Maximum Wage Base

Then there is the big change that both plans suggest, and that is to increase the maximum wage base.

Both of these plans suggest the current cap stay in place but after a certain amount of earnings the tax will kick back in.

The SS 2100 Act has the tax kicking back in at $400,000 and Senator Sanders plan has it coming back in at $250,000. This is where the two proposals get a little different. The SS 2100 act has provisions to reduce taxes on SS benefits and the SS expansion act does not. Additionally, the SS 2100 Act is the only one to suggest a gradually increase to payroll taxes. The SS expansion Act has the BIG change of imposing SS taxes on dividends and capital gains taxes for individuals with incomes over $250,000. The SS 2100 Act left investment type incomes alone.

Childrens’ Benefits

The last point of difference between the two bills is that Senator Sanders’ proposal will extend childrens benefits to age 22 if they are in college or vocation training. 

This side by side comparison doesn’t have every change from these two proposals but it covers the ones that I thought were important. I hope this was valuable for you. 

We're doing a side by side comparison of two Social Security proposals that are quickly gaining steam. One already has enough sponsors to clear the House and the other is from a 2020 presidential candidate. Which one is better?
Summary of Changes at an Overview

Take Action!

Before we go I want to thank you for taking the time to get informed. These changes are BIG! So many people just float into retirement hoping everything will work out. Sometimes it does, but sometimes a lack of planning can ruin what should be your best years. This is your retirement! Please continue to stay informed! 

I’d recommend staying connected with my content so you won’t miss anything. In many cases I’ll publish my newest stuff on YouTube and then share it on my Facebook page. Then my content team does their magic and cleans it up into an article for those who enjoy reading. (Again…the article is shared on my Facebook page.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Thanks for reading…have a great day. 

Question: Which one do you think would be better for the American people? I look forward to seeing your thoughts in the comments below.

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