Two Policy Changes That Could Boost Social Security Benefits

Oh, wonderful news for all you Social Security recipients out there! The typical retired worker currently collects about $2,000 a month in Social Security benefits. Some retirees get more, some get less—how thrilling for everyone relying on these retirement payments.

But wait, there’s hope on the horizon! If our ever-so-efficient lawmakers decide to actually do their jobs, you might—just might—see a meaningful increase in your monthly Social Security benefits. Let’s explore these two potential policy changes that could revolutionize your retirement security. Try to contain your excitement.

1. A New COLA Formula Could Boost Annual Social Security Increases

Inflation drives living costs up? Who knew! That’s why our brilliant lawmakers implemented automatic cost-of-living adjustments (COLAs) to Social Security decades ago. Before that, they actually had to vote to increase your benefits. Imagine the horror of expecting elected officials to do something.

But here’s the kicker—the formula they use is about as relevant to retirees as a snow shovel in the Sahara. They base Social Security COLAs on something called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Yes, that’s right—they’re using an index for working people to calculate adjustments for… non-working people. Genius!

Even better, this index focuses on urban areas, because apparently all seniors live in downtown metropolitan areas and none in rural communities. How thoughtful of them to completely misrepresent the expenses most retirees actually face.

If lawmakers were to switch to a senior-specific index, you might get larger Social Security COLAs. Of course, that would require them to:

• Acknowledge the problem exists
• Take meaningful action
• Prioritize retirement security

Don’t hold your breath waiting for that miracle.

2. A Revised Combined Income Formula Could Reduce Social Security Taxes

President Trump promised to eliminate taxes on Social Security benefits. Shocking development: a politician made a promise that might be impossible to keep! Removing that revenue stream could push Social Security closer to insolvency, but why let pesky details get in the way of a good campaign pledge?

What might actually happen is a revision to the “combined income” formula—that delightful calculation determining whether your benefits get taxed. Currently, it includes:

• 50% of your annual Social Security income
• Annual adjusted gross income (AGI)
• Annual tax-free interest income

So if you receive $48,000 yearly from Social Security with an AGI of $30,000, your combined income would be $54,000. Singles with combined income over $25,000 get taxed, while married couples get a whopping $32,000 threshold. How generous!

These thresholds apparently assume you’re living in 1985, when they were established. Inflation? What’s that? Cost of living increases over four decades? Never heard of it!

Lawmakers might increase these thresholds or change the formula entirely to boost retirement security. They could even remove Social Security income from the equation. Imagine that—not being taxed on money that was already taxed when you earned it! What a revolutionary concept.

But don’t worry—I’m sure our elected officials will get right on this after they finish arguing about literally everything else. Your retirement benefits are definitely at the top of their priority list.