Congress is considering a new bill that would seek to lessen the financial strain on people collecting Social Security by boosting each recipient’s monthly check by $200—an annual increase of $2,400.
Inflation has hit everyone hard, but those on fixed incomes—including seniors and disabled Americans surviving on Social Security Disability benefits—have been struggling even harder to make ends meet.
The Social Security Expansion Act, introduced by Representative Peter DeFazio (D-OR) and Senator Bernie Sanders (I-VT), would help Social Security recipients who have seen a four-decade high in inflation that has pushed up the cost of food, energy, and other basic household expenses.
Representative Steve Cohen (D-TN), a co-sponsor of the bill, said in a press release: “With half of older Americans having no retirement savings, and millions living in poverty, it’s far past time to address the future of Social Security. The Social Security Expansion Act assures that eligible participants will receive an annual benefit permitting them to live in dignity.”
The average monthly Social Security check for retired workers was $1,666 as of April 2022. An extra $200 per month would reflect a 12% increase to this amount.
Social Security payments for disabled workers are even more modest—an average of $1,234 a month. A $200 monthly boost would be a 16% increase for these beneficiaries.
The proposed law includes some other tweaks to the Social Security system. One change would be to base the annual cost-of-living-allowance on the Consumer Price Index for the Elderly (CPI-E), rather than the current index that the Social Security Administration uses for its calculation—the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Social Security advocates say the CPI-E lines up more precisely with the spending habits of those earning Social Security benefits.
The Social Security Expansion Act would also increase benefits for the children of disabled or deceased workers. Currently, Social Security benefits are awarded to these children if they are full-time students, but those benefits expire once they turn 19 years old. The bill’s sponsors are proposing to increase the age limit to 22.
To pay for the increased benefits, the bill would raise the Social Security payroll tax (FICA) on high income earners.
At present, the FICA income cap for workers is $147,000. Those earning more than this amount do not pay any Social Security tax on earnings above $147,000. Under the proposed bill, the payroll tax would kick in again for people earning above $250,000. Only the top 7% of earners would see their taxes go up as a result, DeFazio says.