Legislation Proposes Social Security Enhancements

By on June 11, 2014 in Current Events, Retirement with 26 Comments

Senators Mark Begich (D-AK) and Patty Murray (D-WA) have introduced legislation designed to strengthen the Social Security program in several ways.

Known as the RAISE Act (Retirement and Income Security Enhancements), the legislation claims it will strengthen the Social Security program by increasing the amount of benefits provided under the program. The legislation would do the following:

Enhance benefits for divorced spouses

Under current law, the divorced spouse is only entitled to receive benefits under the former spouse’s earnings if she or he was married for ten years.  Beginning in 2016, the RAISE Act would allow those with less than ten years of marriage to be eligible for benefits under the former spouse’s earnings.  Eligibility would be phased in, so that those married less than ten years would receive less than 100 percent of the spousal benefit. These partial benefits would gradually decrease in increments of 10 percent and phased out for those with less than five years of marriage. For example, those with nine years of marriage would receive 90 percent. The same formula will apply to survivors benefits for divorced spouses.

Enhance benefits for widows and widowers

The RAISE Act would establish an alternative benefit for a surviving spouse where both husband and wife established insured status as retired workers. For the surviving spouse, the alternative benefit would equal 75 percent of the sum of the survivor’s own worker benefit and the Primary Insurance Amount (PIA) of the deceased spouse. The alternative benefit would be paid only if more than the current law benefit. This benefit would be available to surviving spouses on the rolls at the beginning of 2016 and those becoming eligible after 2016.

Extend benefit eligibility for children of retired, disabled or deceased workers

This provision of the RAISE Act applies if the child is in high school, college, or vocational school. Under current law, minor children under the age of 18, and high school students under age 19 are entitled to benefits if they are the child of a retired, disabled, or deceased worker. Beginning in 2016, this provision extends benefits for full-time students until the age of 23 if they are a child of a retired, disabled or deceased worker.

How would it pay for these new benefits? By taxing the wealthy. The RAISE Act would apply a two percent payroll tax rate on earnings over $400,000, with the threshold wage-indexed after 2015. The bill provides a corresponding credit for earnings in a secondary average indexed monthly earnings (AIME) formula for benefit computation.

The legislation would do little to address the solvency of the trust fund. According to the Senators’ press release, the RAISE Act would extend the life of the Social Security Trust Fund from 2033 to 2034.

 

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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