Proposed Changes to Social Security Benefits

Dear Friends,
This is my first newsletter to clients who’ve retained me, to help them determine how and when to claim Social Security benefits. Over the past 5 years I’ve consulted with over 1000 couples and individuals as it relates to claiming Social Security benefits. I’m doing this because of recent calls and emails I’ve received regarding LIFE CHANGES they’ve experienced (Deaths, Divorce, Health Changes, Financial Issues, Etc.) that could possibly change the advice I gave them initially.
Please let me know your thoughts and suggestions as to content or issues you’d like me to cover.

With the Democrats now in charge of the House, they recently introduced The Social Security 2100 Act.  I thought it would be timely and appropriate to look at their proposed changes and see how it might affect my ongoing consultations and the clients I serve.  The objective of the bill would be to increase benefits while at the same time increasing the solvency of Social Security for the rest of the Century.


  • Provide an across-the-board benefit increase of 2% of the average Social Security benefit
  • Raise the annual cost of living adjustment to reflect how older American’s spend their money
  • Increase the minimum benefit to ensure that workers with many years of low earnings do not retire in poverty
  • Cut Federal Income taxes on Social Security benefits for 12 million middle income people


  • Raise the payroll tax to 14.8% over the next 24 years from 12.4% on earnings up to $132,900
  • Impose FICA taxes on earnings over $400,000, thus creating a doughnut hole between $132,900 and $400,000

Approximately 63 million people received a total of $1 Trillion in Social Security benefits in 2018 and the number of recipients is expected to surge to 80 million over the next 10 years.  There is currently approximately $3 Trillion in the Social Security Trust Fund, that is expected to be depleted in 2034.  Without any changes, benefits would be decreased by approximately 21% at that time.  Many people ask, “If the trust fund in depleted in 2034 where will the money come from?”  The answer, it will come from people who are still working.

According to Rep. John Larson, D-Conn the legislations principal sponsor of all the money raised by the tax increases 25% will go towards increased benefits and the rest would cover projected deficits over the next 75 years.

I applaud Rep. Larson and the 200 members in the House who support his bill, because the time has come to address this shortfall issue.  Andrew Biggs, a Republican who was the principal deputy commission of Social Security under President George W. Bush, praised some features of Larson’s bill.  “It doesn’t just fix Social Security for 75 years, it would keep the system permanently solvent.  That is a real plus.”  “On the other hand, “the bill would give a lot of money to middle- and upper income retirees who are already doing well.  And it would significantly increase payroll taxes.”

2 Minute Warning

Congress is always extremely good and kicking the can down the road and letting someone else fix their mess or be forced to make changes at the last possible moment.  There little doubt changes will be made to this proposal, when it get to the entire house and then moves onto the Senate and ultimately the Presidents desk.


Social Security will be there when we all retire, payroll taxes will continue to increase, most of us will probably continue to pay income taxes on Social Security benefits, I don’t see means testing (those who have too high of an income will not receive Social Security benefits), since the formula for benefits is already means tested.  I also think the Full Retirement Age which is currently 67 will be increased gradually to age 70, but not affect individuals currently over 55 years of age.

I guess we’ll all wait and see what changes come about in the coming months, but I’m glad that these conversations are starting now.

Have a most excellent month and never hesitate contacting me, if you think I can be of assistance!

Also, if you know of friends or family considering claiming, don’t hesitate referring them to me. 



Live in a constant state of contentment!

Dave Zander, CFP®