Personal Finance

Here's how Joe Biden plans to change Social Security if he is elected president

Key Points
  • Americans count on Social Security for retirement, disability and survivor benefits. But the program's funds could face a shortfall sooner than previously expected due to Covid-19.
  • Former vice president Joe Biden, the presumptive Democratic nominee for president, has unveiled plans to shore up the program's solvency while increasing benefits in several areas.
  • The changes would mean more taxes for high earners. But it would also ensure that benefits stay a certain amount above the federal poverty level for those at the bottom.
Joe Biden: We will overcome this season of darkness in America
Joe Biden: We will overcome this season of darkness in America

The coronavirus pandemic could have a big impact on Social Security's financial prospects. And that means the future of the program could be a bigger issue in the 2020 presidential election.

This year alone, about 65 million Americans will receive more than $1 trillion in benefits through Social Security retirement, disability and survivor benefits.

But the funds used to pay those benefits will likely become depleted sooner than previously anticipated due to the effects Covid-19 has had on the U.S. economy.

Just how quickly those funds could run out is still to be determined. In April, the Social Security Administration said the funds were projected to run out in 2035, at which point 79% of benefits would be payable.

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But the depletion of the funds has accelerated since then, with other projections indicating the program's funds could run out as soon as 2032 or 2028.

Former vice president Joe Biden, who will clinch the Democratic nomination for president this week, has backed expanding the program, with bigger benefit checks to Americans and higher taxes on the wealthy.

Biden's campaign plan calls for restoring the long-term solvency of the program by having high-wage earners pay taxes toward Social Security. Currently, employees and employers each pay 6.2% from wages. But that is currently capped at wages of $137,700. Biden's plan calls for applying those taxes to earnings over $400,000.

Biden's plan would improve benefits for individuals in several key ways.

How to pay less in taxes on your Social Security benefits
How to pay less in taxes on your Social Security benefits

It calls for increasing payments for individuals who have been receiving retirement benefits for at least 20 years. That would represent a 5% increase to the their full retirement age benefit amount. The idea is aimed at protecting those older individuals against having to deplete their savings.

Biden's plan would also set a minimum benefit so that all workers who put in 30 years of work would be guaranteed a benefit equal to at least 125% of the federal poverty level.

The plan would also increase survivor benefits for widows and widowers by about 20% more per month. Surviving spouses currently can receive 100% of a deceased worker's benefit as long as they are at full retirement age or older. (This depends on your age and eligibility for other benefits. If you are also eligible for your own retirement benefits, for example, you will generally receive only one of the two benefits.)

But many survivors take their benefits before their full retirement age, which reduces their Social Security checks.

Biden's proposal also calls for letting teachers who are not eligible for Social Security begin receiving pension benefits sooner than the 10 years that many of their plans currently require.

The plan also calls for eliminating benefit cuts for workers who are eligible for both Social Security and a separate pension.

The future of Social Security was a sometimes divisive issue on the presidential campaign trail leading up to the Democratic National Convention this week.

Biden and Sen. Bernie Sanders, I-Vt., who also ran for the commander-in-chief spot, argued over Social Security, even though both candidates are for expanding, not cutting, the program.

How Social Security benefits are calculated on the median U.S. salary
How Social Security benefits are calculated

At the crux of the issue were comments Biden made about the program in the 1990s, when he was a senator representing Delaware, that included possible benefit cuts.

Those differences seem to have been put aside on Monday night, when Sanders endorsed Biden's candidacy.

Social Security Works, an advocacy organization that wants to see the program expanded, has also backed Biden for president through its political action committee.