On December 21, the U.S. Senate approved the Social Security Fairness Act, which is now on its way to the president to be signed into law. The bill aims to boost Social Security benefits for certain Americans. However, not everyone is convinced it’s a fair move.
Brenton Smith, from the Heartland Institute, a public policy think tank, has voiced concerns, calling the bill “incredibly irresponsible.” He worries that it could actually lead to faster benefit cuts, leaving those who depend on Social Security anxious about their future. “Where are the people who promised to protect Social Security?” he asks.
While some public worker groups are celebrating the bill’s passage, arguing that it corrects an unfair system, others believe it could make things worse.
So, what exactly is the Social Security Fairness Act, and why is it causing such a stir?
What is the Social Security Fairness Act?
The Social Security Fairness Act is designed to help those who once opted out of Social Security during their careers. It changes the rules in two main ways.
First, it removes the Windfall Elimination Provision, which can lower benefits for workers who get pensions or disability benefits from jobs that don’t pay into Social Security, like public service employees. Second, it gets rid of the Government Pension Offset, which can cut spousal benefits if you’re receiving government-based retirement or disability benefits that didn’t involve Social Security taxes.
Brenton Smith explains that about 4% of workers contribute to pensions that don’t include Social Security. Some of these workers may have previously paid into Social Security or are married to people who do. With these changes, they could see “overly generous” benefit checks, Smith argues, potentially funded by those who have paid into Social Security their whole careers.
Supporters of the bill argue that the old rules were unfair to government workers who previously contributed to Social Security. They say it penalized people who choose to serve as firefighters, police officers, postal workers, or teachers.
However, critics agree that the rules needed reform but worry that the new bill could worsen the already shaky finances of Social Security. The program’s trust fund is predicted to run dry by 2035, which could lead to reduced benefits. Smith fears the new bill might speed up this process, resulting in deeper cuts to Social Security benefits for those who’ve been paying into it for decades.
What Can Americans Do?
Smith pointed out that even though Washington, D.C., think tanks don’t always agree, many are united in opposing this bill. As it nears being signed into law, it serves as a reminder for retirees to save outside of Social Security.
Without action to fix Social Security’s finances, benefits could be cut, whether this bill passes or not. It’s up to lawmakers to address the issue.
One think tank Smith mentioned, the Committee for a Responsible Federal Budget, predicts that the bill will make Social Security run out of money six months sooner, reducing lifetime benefits for retirees. Other changes in the near future, such as some of President-elect Donald Trump’s campaign promises, might also add to the program’s financial struggles.
To prepare for potential cuts, it’s a good idea to contribute to retirement plans like a 401(k) or IRA. These savings can give you a sense of security, knowing you’ll have funds beyond Social Security when the time comes.
If you’re interested in learning more about how to secure your retirement, there are easy ways to catch up, even if you’re starting late. Don’t panic — a little planning can go a long way!
