W.With inflation at its highest level in 40 years, the topic of social security, especially retirement benefits, is hotly contested around the world. America.
Retirees who rely on retirement funds have struggled to finance basic necessities such as food, medicines, medical care and housing as their retirement spending power has declined significantly over the past year.
An estimated 88% of Americans over the age of 65 receive some form of Social Security, and more than half say these payments make up the majority of their income.
Indeed, the United States is also suffering from declining fertility and life expectancy problems, with the worker-beneficiary ratio now pegged at 2.8, down from 5.1 in 1960 and set to fall to 2.3 by 2035. expected.
Three Reforms of Social Security Benefits
With this in mind, the U.S. government is considering implementing three major reforms that can protect Social Security and help its beneficiaries.
1. Replace COLA with CPI-W
Introduced in 1971, the Cost of Living Adjustment (COLA) has been used to ensure linearity between Social Security and inflation.
A key piece of information in determining COLA is the Urban Wage and Office Worker Consumer Price Index (CPI-W), a measure based on purchases by working professionals.
However, a better way to calculate COLA is to use CPI-E, or Consumer Price Index for Senior Citizenswas introduced by the Social Security Extension Act.
By tracking seniors’ spending, it is estimated that retirees still have ample purchasing power.
2. Apply the Social Security payroll tax to more income
Proposed under the Social Security Extensions Act, the measure aims to apply the Social Security payroll tax to all income over $250,000.
The act would also tax the investment and business income of America’s richest individuals and families to help fund the program.
3. Increase payments to long-term beneficiaries
Suggested by Joe BidenThis initiative will increase social security benefits by increasing social security benefits for individuals aged 78 to 82 by 1% each year.
This would ultimately result in a 5% increase in the cumulative number of individuals receiving retirement benefits over 20 years.