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As Republicans propose to raise the Social Security retirement age, here's how benefits may change [1]

['Lorie Konish']

Date: 2024-03-22

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This week, the Republican Study Committee, a large group of conservative House Republicans, released a 2025 budget proposal including significant reforms for Social Security and Medicare. President Joe Biden, in his own recent budget proposal, also outlined broad changes he hopes can be made to those programs. Changes that are enacted to Social Security and Medicare will have to be bipartisan. "Any kind of durable policy with a realistic chance of getting through Congress is going to have to include aspects from both of these budgets," Sprick said.

Republican budget calls for raising retirement age

The Republican Study Committee budget calls for "Making Social Security Solvent Again." The reforms would be gradually phased in and "affect no senior in or near retirement," according to the plan. Ultimately, the goal for the changes is to make Social Security's retirement trust fund "sustainably solvent." Republicans' budget proposal calls for "modest adjustments" to the retirement age to reflect longer life expectancies, though it did not specify how high the age could go up. Social Security's full retirement age — when beneficiaries may receive 100% of the benefits they've earned — is currently 67 for people born in 1960 or later. The plan also calls for reducing full retirement age benefits for high-income earners, while also limiting and phasing out "auxiliary benefits" for those beneficiaries' spouses and dependents. The budget did not specify the income thresholds to which those changes would apply. "There is a lot of willingness and openness on the Republican side of the aisle to reduce Social Security benefits for high earners," Sprick said. The Republican budget proposal would restructure Medicare so beneficiaries receive premium support subsidies, which they may use to pay for either through federal traditional Medicare or private Medicare Advantage plans. The amount of the subsidies would be based on a benchmark that would be chosen after testing several options, according to the plan.

Biden's proposal opposes benefit cuts

Biden's budget outlines the ways in which the president wants to address the looming funding shortages both Social Security and Medicare currently face. "No benefit cuts," the budget states regarding Social Security. Efforts to privatize the program are also off the table. To help shore up Social Security's shortfall, Biden's budget calls for the "highest-income Americans to pay their fair share." "Under my plan nobody earning less than $400,000 will pay an additional penny in federal taxes," Biden said during his State of the Union address earlier this month.

The president's budget proposal also calls for improving Social Security and Supplemental Security Income benefits for retirees and individuals with disabilities who "face the greatest challenges making ends meet." Biden's budget also aims to shore up Medicare in keeping with changes he has previously proposed. That includes raising the Medicare tax rate on both earned and unearned income from 3.8% to 5% for those earning more than $400,000.

Parties trade jabs on proposals

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[1] Url: https://www.cnbc.com/2024/03/22/how-social-security-benefits-may-change-under-republican-democrat-proposals.html

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