Social Security could increase by $2,400 a year thanks to new Bill

Social Security has several financial solvency problems and this bill can increase benefits instead of reducing them

Social Security payments cards

Social Security payments cards - Canva

The ravages of inflation on retirees in the United States are enormous. Social Security retirement benefit checks in many cases are not sufficient. And, to top it off, it appears that the economic funds are depleted and soon Social Security will not be able to pay all full retirements. This could be the case, although a new law proposal that would change this completely.

With this new bill, not only would benefits not be reduced. This new bill would also increase the money available to pay them. And all in a very logical and hassle-free way for retirees collecting their Social Security benefit. This bill is very interesting because many retirees who collect Social Security have no other source of income.

Read more: Social Security beneficiaries could get an extra $200 a month

The Bill to increase Social Security

This Bill is intended to increase Social Security income. The main objective is that revenues do not go down, but with this strategy there may be higher revenues so that the trust funds will not be in trouble for many years to come. The trustees predict that the funds will end in 2035.

But all is not lost. Senators Bernie Sanders and Elizabeth Warren have created a bill to eliminate this problem. This bill is called the Social Security Expansion Act. With this new Bill they are asking for an increase of $200 per month (or $2,400 per year). According to the two senators, this is possible by raising taxes on people who earn more money per year.

Cards Social Security – Canva

Who would be affected by this tax increase?

Annual taxes have a maximum in the United States. That maximum is on the salary of people earning up to $147,000 per year. Past that point, the amount of tax is the same. This means that a person who earns $2 million per year will pay the same amount in taxes as if he/she earns the aforementioned amount. This directly affects Social Security.

We cannot know exactly if this bill will have an effect or not, because it is only a proposal, but it would raise taxes on the people with the most money. General taxes are 6.2% of the total salary. For the self-employed, taxes are 12.4%. With this new law proposal, those who earn a very high salary would pay the same as the self-employed, 12.4%. Thanks to this, the Social Security could obtain sufficient funds so that, in the future, it could even increase retirement benefits.

Most workers in the United States don’t earn that much, so don’t worry about a tax hike if you earn less than $175,000 a year. This doesn’t affect your Social Security benefits either, as nobody earns that much money.

Thanks to the new law, it is possible that the mutual funds will increase in order to be able to pay out all pensions longer. In addition, Social Security can pay up to $200 a month more to all retirees. In any case, this proposal is not accepted, so we will have to wait a while to see if it eventually becomes a reality.

You have to pay Social Security taxes in some cases

When to apply for retirement pay?

The exact date to apply for your Social Security retirement pay depends on your needs. The best option is always the later the better, but if you need money because you are out of work, you can always apply earlier. If you do it before the age of 62, the amount of money will be much less. But, as we said before, it all depends on what needs you have and, of course, if you are working or totally unemployed.

Now that you know how to apply for Social Security and when is the best time to do it, you just have to start applying to enjoy your retirement and the rest you deserve.