Here’s what President Joe Biden would mean for Americans’ retirement savings

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Joe Biden will be the next president of the United States, changing the political party at the head of the White House – and possibly the direction of retirement security for Americans across the country, AP projection says. .

Biden has vowed to solve many issues as president, one of which includes retirement security and the dignity of older Americans as they age. He leaked proposals to slow the rise in prescription drug prices, make Social Security changes in the name of his insolvency problem, and fight age discrimination for older Americans who wish to remain in the labor market. “There is more information available on what a Biden administration would like to do for retirement security compared to the current administration,” said Bridget Early, executive director of the National Public Pension Coalition, a group of defense.See: 5 Election Results You May Have Missed While Watching The Presidential Result

Saving for retirement

Workers receive tax benefits when they participate in defined contribution plans, such as the 401 (k) plan. As it stands, the system is preferential to upper-class families, who enjoy “greater tax relief for savings,” over middle- and low-income workers, Biden said on his report. campaign site. Biden said he would “equalize” those benefits.

One way to do this is to use lump-sum tax credits for every dollar saved, compared to the current system, which gives higher earners a “bigger break,” said Stephen Miller, director and content editor. online compensation and benefits to the Company. for human resources management (SHRM).

Here’s an example, provided by Congress news and data site Roll Call: A single filer in the highest 37% tax bracket earning $ 600,000 currently gets a tax deduction of $ 370 for every $ 1,000. USD that he contributes to a 401 (k) plan, compared to a single filer earning $ 60,000 and in the 22% tax bracket, who only receives a tax deduction of $ 220 for every 1 $ 000 contribution. With a flat tax credit, using the same example as before, individuals earning $ 600,000 and $ 60,000 would both get a tax credit of $ 260 for that $ 1,000 contribution.

Biden also said caregivers should be allowed to make “catch-up” contributions to retirement accounts, as their careers and retirement savings journey are often disrupted when they leave the workforce to care. of a sick or elderly loved one. Workers who take on these family responsibilities face many obstacles, including the suspension or reduction of their own income, which could also mean the loss of access to a workplace pension plan. Biden said they should be able to make “catch-up” contributions even if they don’t “earn income in the formal labor market” – a proposal introduced with the bipartisan support of Democratic Representative Harley Rouda and of Republican Jackie Walorski. His plan also mentions an informal care tax credit and tax breaks for older Americans who purchase long-term care insurance.

Finally, Biden’s site mentions giving small businesses tax relief to provide their employees with retirement benefits, such as tax credits to offset costs associated with starting a plan. Biden mentioned that anyone without a retirement plan would also have access to an “automatic 401 (k),” so they can start saving for their future. His campaign did not provide more details on what this type of account would entail.

Also see: Here’s what we know about the 5 states whose electoral college votes weren’t called

Retired

Social security is not often discussed on the debate stage, in part because of the controversy over proposals to address it, but it is a crucial aspect of retirement security. Millions of Americans rely on the program for a portion of their retirement income, and for others, it is their primary source. Biden said he would improve Social Security by increasing payroll taxes for people earning more than $ 400,000, from the current limit of $ 137,700. This would likely result in political repression, as it would only take the highest incomes to make “additional sacrifices,” according to an analysis by the Urban Institute and the Brookings Institution’s Center for Fiscal Policy.

According to the Wharton School at the University of Pennsylvania, employees located between these thresholds would still be exempt for the foreseeable future, although this “donut hole,” as it’s called, disappears over time. The gap between those two amounts would narrow because the $ 400,000 figure would remain fixed while average wage growth (currently $ 137,700 in 2020) would continue to increase each year.

Biden also suggested that there be a minimum benefit, where all beneficiaries who have worked 30 years get as much as 125% of the federal poverty level. His plan is also aimed at people with restrictions on social security, including teachers and other public sector workers.

Many analysts praise the candidate for listing ways to fix the program, but others say more details need to emerge. There should also be a focus on “simplifying” the system, analyst Brenton Smith said, as well as finding ways to reform the system – not just expand it.

What could happen next

Of course, retirement security was on the minds of some lawmakers before the election. The Ways and Means Committee last month introduced bipartisan legislation called the Securing a Strong Retirement Act of 2020, which builds on the security law passed in December. The bill allows individuals to repay their student loans while obtaining employer matching for their retirement accounts; it is easier for military spouses to save for their retirement when they do not always have access to stable employment; and the creation of a national database that allows Americans to locate lost retirement accounts. Before the election results were announced, Miller said, “Whether it’s a Trump administration or a Biden administration, it will go through Congress. Something is going to have happened. “

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