A new proposal aims to improve Social Security benefits for two often-overlooked groups: caregivers and older workers in physically demanding jobs. This initiative comes at a time when concerns about the program’s financial future are growing.
With the Social Security Administration (SSA) projecting funding shortfalls in the coming decades, policymakers are under pressure to find solutions that ensure benefits remain sustainable while addressing the needs of vulnerable populations.
Why This Proposal Matters
Social Security is a lifeline for millions of Americans, but its long-term viability is uncertain. According to the 2023 Trustees Report, the Old-Age and Survivors Insurance (OASI) Trust Fund will only be able to pay full benefits until 2033. After that, beneficiaries may receive just 77% of their scheduled payments unless Congress enacts reforms.
A survey by the National Academy of Social Insurance (NASI) found that 85% of Americans are willing to accept higher taxes to sustain Social Security. This strong public support for reform underscores the need for policy changes that protect caregivers and older workers while ensuring the program’s financial stability.
Key Highlights of the Proposal
A recent public survey, conducted by NASI in collaboration with AARP, the National Institute on Retirement Security, and the U.S. Chamber of Commerce, reveals bipartisan support for strengthening Social Security. The proposed reforms focus on two key areas:
1. Caregiving Credit for Parents
Caregivers, particularly women, often face lower Social Security benefits due to time spent away from work raising children. The proposed caregiving credit would help parents who take time off to care for children under the age of six by ensuring these years do not negatively impact their future Social Security benefits.
This change acknowledges the economic value of caregiving and aims to provide more financial security to those who take on this crucial role.
2. Bridge Benefit for Older Workers
Many older workers in physically demanding jobs retire early due to health concerns, which results in reduced Social Security benefits. The bridge benefit would provide financial support to these workers, helping them avoid penalties for early retirement.
The NASI survey found that both the caregiving credit and the bridge benefit have strong public backing, with nearly 60% of respondents supporting each measure.
Funding the Proposed Changes
To fund these expansions, the proposal suggests two key changes to the payroll tax system:
- Eliminating the earnings cap on payroll tax contributions for incomes above $400,000.
- Gradually increasing the payroll tax rate from 6.2% to 7.2% for both employers and employees.
These funding measures are widely supported, with 82% of respondents favoring them as a way to close Social Security’s long-term financing gap.
Proposal Breakdown and Public Support
| Proposal | Supported by (%) | Key Features |
|---|---|---|
| Caregiving Credit | 60% | Credit for parents who take time off to care for young children |
| Bridge Benefit | 60% | Support for older workers in physically demanding jobs to avoid early retirement penalties |
| Payroll Tax Changes | 82% | Eliminating the cap on earnings over $400,000 and gradually increasing payroll tax rates |
What Experts Are Saying
Financial experts have weighed in on the proposal, offering both support and concerns about its potential impact.
- Alex Beene, financial literacy instructor at the University of Tennessee at Martin, believes extending benefits to caregivers and older workers would be a positive step. However, he questions whether these changes would take priority over other needed reforms to Social Security.
- Kevin Thompson, CEO of 9i Capital Group, cautions that expanding benefits for non-contributing individuals could put additional strain on Social Security. While he supports increasing taxes on high earners, he notes that passing such reforms through Congress remains challenging.
What Happens Next?
While this proposal has gained attention, its future remains uncertain. Lawmakers have introduced other bills aimed at Social Security reform, including:
- The RETIREES FIRST Act, introduced by Senators Roger Marshall and Marsha Blackburn, which seeks to eliminate taxes on Social Security benefits.
- The Senior Citizens Tax Elimination Act, proposed by Representatives Daniel Webster and Thomas Massie, which also aims to eliminate taxes on Social Security income.
The debate over Social Security reform will continue as Congress weighs various proposals to secure the program’s future. Regardless of the outcome, the push to expand benefits for caregivers and older workers highlights the ongoing need for policy adjustments in response to economic and demographic shifts.
FAQs
The caregiving credit would provide additional Social Security benefits to parents who take time off work to care for children under six. This ensures their benefits are not reduced due to interrupted work history.
The bridge benefit would support older workers in physically demanding jobs who retire early due to health concerns. It would help them avoid reduced Social Security benefits.
The proposed changes would be funded by removing the payroll tax cap on incomes over $400,000 and gradually increasing the payroll tax rate from 6.2% to 7.2%.