Joe Biden is expected to be the next President of the United States, according to AP’s prediction, changing the political party that leads the White House – and perhaps the direction of security for Americans across the country.
Biden has promised to solve many problems as president, one of which includes retirement security and the dignity of older Americans as they get older. He revealed proposals to slow the rise in prescription drug prices, enact changes to Social Security for the sake of insolvency and anti-age discrimination for people. Older Americans want to continue working in the workforce. “There is more information based on what the Biden administration wants to do to ensure retirement security than the current administration,” said Bridget Early, executive director of the National Public Pension Coalition, an advocacy group.
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Save for retirement
Employees receive tax benefits when they participate in defined contribution plans, such as a 401(k) plan. As it stands, the system is endowed with upper-class families who receive “stronger tax breaks to save”, compared with middle and lower income workers, Biden said. on your advocacy website. Biden said he will “balance” these benefits.
One way to do that is to use fixed tax credits for every dollar saved, compared to the current system, which gives higher earners a “bigger vacation”, Stephen Miller, online content editor and curator for compensation and benefits at the Association. for Human Resource Management (SHRM).
Here’s an example, provided by congressional news and data website Attendance: An applicant in the top 37% tax bracket earns $ 600,000 now with a tax deduction of $ 370 per person. The $ 1,000 she contributes to the 401 (k) plan, compared to an applicant earning $ 60,000 and in the 22% tax bracket, who gets only $ 220 tax deduction for every $ 1,000 contributed. With a fixed tax credit, using the same previous example, individuals making $ 600,000 and $ 60,000 will both receive a $ 260 tax credit on that $ 1,000 contribution.
Biden also said caregivers should be allowed to make a “catch-up” contribution to retirement, as their careers and retirement savings journey are often interrupted when they leave the workforce to take care of them. care for sick or frail relatives. Workers with these family responsibilities face many barriers, including suspending or reducing their income, which can also mean loss of access to retirement. at work. Biden said they will be able to make a “catch-up” contribution even if they don’t “earn an income in the formal labor market” – a proposal put forward with bipartisan backing by the Party Deputies. Democrat Harley Rouda and Republican Senator Jackie Walorski. His plan also covers tax credits for informal care and tax benefits for older Americans who purchase long-term care insurance.
Finally, the Biden website mentions giving small businesses tax breaks to provide their employees with retirement pensions, such as tax credits to recoup the costs associated with their work. start a plan. Biden mentions that anyone who doesn’t have a retirement plan will have access to an “automatic 401 (k)”, so they can start saving for their future. His campaign provided no further details about what that type of account would require.
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When you retire
Social security is often not discussed on the debates stage, partly due to the controversial proposals to fix the issue, but it’s an important aspect of retirement security. Millions of Americans rely on the program for a share of their retirement income and for others it’s their biggest source. Biden said he will improve Social Security by raising payroll taxes for people making more than $ 400,000, compared with the current limit of $ 137,700. Doing so could lead to political backlash, according to an analysis from the Brookings Institution’s Urban Institute and Tax Policy Center, as it only requires “extra sacrifices” for those on a higher income.
Earners in between these thresholds will remain exempt in the short term, although the “donut hole” in question will disappear over time, according to the University of Pennsylvania’s Wharton School. The gap between the two will narrow as the $ 400,000 figure will remain constant while the average wage increase (currently $ 137,700 in 2020) will continue to increase year on year.
Biden also proposed a minimum subsidy, in which all beneficiaries who worked for 30 years received no less than 125% of the federal poverty level. His plan also addresses people restricted to Social Security, including teachers and other public sector workers.
Many analysts praised the candidate for listing ways to fix the program, but others said more details were needed. We also need to focus on “simplifying” the system, as well as finding ways to reform the system – not just expanding it, says analyst Brenton Smith.
What could happen next
Of course, retirement security was on the minds of some lawmakers before the election. The Means and Vehicles Commission introduced a bipartisan law last month called the Powerful Retirement Guarantee Act of 2020, which builds on the Privacy Act passed in December. allowing individuals to pay off student loans but still be matched by employers with their retirement accounts; making it easier for military spouses to save for retirement when they may not always have a stable job; and create a national database for Americans to search for lost retirement accounts. Before the election results are announced, Miller said, “Whether it’s the Trump administration or the Biden administration, it goes through Congress. Something will be done. ”