Several years ago, when it seemed that everybody and their dog was trying to cut our federal retirement benefits, I wrote an article that ended with this advice – “Don’t Panic!” It turned out that was good advice, as our benefits escaped the meat axe.
I think that today, as proposals are being floated to enhance our benefits and our Social Security, we need to follow some different advice – “Don’t Hold Your Breath!”
We need to remember what we learned in Civics class about how a bill becomes a law. There are lots of steps between legislation being introduced and being enacted. According to the Huffington Post, in any given session of Congress, only 4% of bills that were introduced actually become law.
Of what enhancements do I write?
The Equal COLA Act
The Equal COLA Act which would increase the FERS retirement COLA to that received by CSRS retirees. If this were in effect now, instead of the 2% COLA FERS retirees age 62 and older received, the COLA would have been 2.8%. The bill would make no change in the age of eligibility for the COLA.
The Social Security 2100 Act
The Social Security 2100 Act which would:
- Change the way the Social Security COLA is computed to use the CPI-E (consumer price index for the elderly) rather than the CPI-W (consumer price index for urban wage-earners and clerical workers). This would result in slightly higher Social Security COLAs.
- Increase the Social Security retirement benefit by increasing the first “bend point” in the computation to 93% from 90%. It is estimated that this would increase the average Social Security retirement benefit by 2%.
- Raise the income thresholds that apply to the taxation of Social Security benefits for federal income tax purposes.
- Collect the Social Security payroll tax from incomes greater than $400,000. This would leave a “donut hole” of income (that between the current $132,900 tax cap and $400,000) that was not subject to the payroll tax.
- Increase the Social Security payroll tax by 0.1% per year from now through 2043.
There’s a long way for these proposals to go before any benefits reach FERS retirees and Social Security recipients. And, in a divided government, chances of passage and presidential approval are even slimmer.
It’s nice to see our elected representatives suggesting better, rather than worse, benefits but, like I suggested at the beginning of this article – Don’t Hold Your Breath!