Sen. Elizabeth Warren has been arguing for years that Social Security needs to be expanded, rather than cut, and that expansion can help secure its future for generations to come. Her latest plan would increase benefits for every person on Social Security by $200 a month.
As she points out, "Social Security has become the main source of retirement income for most seniors." For growing numbers of people of color, Social Security is the only source of income in retirement, and the average payout of $1,354 a month, $16,248 a year, is near poverty when it's the only income. "For someone who worked their entire adult life at an average wage and retired this year at the age of 66, Social Security will replace just 41% of what they used to make," Warren writes. "That's well short of the 70% many financial advisers recommend for a decent retirement—one that allows you to keep living in your home, go to a doctor when you’re sick, and get the prescription drugs you need."
In addition, she would change the annual cost of living adjustment to an index called CPI-E, which better reflects cost changes that seniors face, such as in medical care and housing. That would also allow for larger increases in benefits to better keep up with inflation.
She also will provide credits for time spent outside of the traditional workforce but in family care-giving, either to children under age 6 or for elder care. Women disproportionately face poverty in old age because they've spent time out of the work force and weren't paying into Social Security. Warren's plan would honor that work. She'd also eliminate provisions in current law that prevent former public-sector workers—teachers and cops and firefighters—from getting full Social Security benefits.
Her plan would also extend Social Security solvency's by nearly two decades with the infusion of contributions from the wealthy. Critically, Warren also commits to fully funding the Social Security Administration to reverse the drastic budget cuts its suffered, leading to understaffing, outdated technology, and the inability to provide good customer service.
She would pay for it all by raising the payroll tax to 14.8% for individuals who earn more than $250,000 a year, to be split by workers and their employers, and a 14.8% tax on investment income that would apply to the top 2% of earners. The payroll tax currently is 12.4%, split between workers and employers. This year the cap—the maximum amount of income that’s taxable—is $132,900. Earnings above that aren't subject to payroll taxes at all. Warren's plan doesn't penalize people earning more than that $133K by adding to their taxes, not until they make more than $250,000 annually.
Her plan is detailed and far-reaching, touching on disability benefits and survivor benefits and every aspect of the program. She's worked with the experts to cover all the bases, including Nancy Altman, President of Social Security Works, who calls the plan "a solution for all generations" that "expands Social Security and ensures that all benefits can be paid in full and on time. Her plan addresses rising income and wealth inequality by requiring the wealthiest two percent to contribute their fair share."