Biden's 4 Social Security Reforms Could Hurt Your Budget by 2024

Payroll Tax Implementation for Income Over $400,000

Currently, a 12.4% payroll tax is applied to any earned income that is less than $160,200. OASI taxes are not applied to earnings that are higher than that threshold. Biden wants to tax income earned over $400,000 while exempting wages over $160,200 up to $400,000.

Change the Method Used to Calculate COLA Increases

The Cost of Living Allowance (COLA), which is calculated annually based on inflation, is used to alter Social Security benefits. The administration now determines COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

However, this figure may not accurately represent the costs and way of life of retirees. The issue of Social Security running out of money won't be resolved by switching COLA calculations to numbers based on the Consumer Price Index for the Elderly. However, it might put more money in the hands of American retirees who most need it.

Raising the Primary Insurance Limit

The amount of Social Security payments you'll receive is determined by your Average Indexed Monthly Earnings (AIME), when you start claiming benefits, and the Primary Insurance Amount (PIA). For Americans aged 78 to 82, raising the PIA would benefit individuals who face increased costs in later life, such as healthcare.