KEY POINTS

  • From tax credits to health care payments, Biden has a plan to help older Americans
  • His proposals would face kickback from Republicans in Congress
  • Social Security accounts for about half of the income for older adults

President-elect Joe Biden aims to prop up retirement savings by expanding access to 401(k) and other means, though he could face opposition from Republican legislators.

Michigan state canvassers late Monday certified the vote count, essentially ending President Donald Trump’s efforts to overturn the contest. In the general election, however, House Democrats saw their majority diminish while the party needs to win both January run-off elections in Georgia to take control the of the Senate.

Biden’s plans must pass both chambers next year if his agenda is to move forward. Here’s what’s at stake:

On the campaign trail, Biden proposed a 6.2% tax on those earning more than $400,000 a year to prop up Social Security. Analysis from October by The Urban Institute, a left-of-center think tank in Washington D.C., finds the proposal “would cut the poverty rate for adult Social Security beneficiaries over the coming decades by more than half.”

To amend the Social Security program, however, 60 votes in the Senate are required, an uphill battle given the expected balance of power.

Patrick Rush, an author and CEO of Triad Financial Advisors in North Carolina, told Yahoo! news on Monday that a watered-down version with the tax threshold closer to $200,000 a year might draw enough bipartisan appeal.

“You could probably get a lot more people taxed in this range and more partisan agreement,” he said. “You could get a lot more people behind the idea of a progressive tax that will distribute wealth.”

Elsewhere, Biden would work to boost the minimum in Social Security payments to 125% of the federal poverty level, helping to lift some 12.8% of adults over 65 who would otherwise fall below that line. Of course, that is if Congress agrees with his measure.

During the campaign, Trump saw his support among older adults dwindle. Countering fears that Social Security would run out of money, Trump re-election campaign spokesman Tim Murtaugh told CNBC recently that protection was needed “from Democrats pushing plans to give benefits to illegal aliens.”

Biden also proposed a new way to calculate cost-of-living adjustments on Social Security payments away from an index based in part on income from clerical or wage-paying jobs to one that focuses on spending levels from older adults. That index that also takes health care costs into account.

As for Medicare, the president-elect has a multi-tiered plan aimed at making health care more affordable for older adults. Among the proposals is lowering the age at which older adults are eligible for the plan.

F. Michael Zovistoski, managing director at financial firm UHY Advisors, told Yahoo! that for those who’ve been retired for 20 years or so, “their largest cost is typically prescription drugs and other medical cost.”

From tax breaks to automated savings plans, Biden would aim to get more people into a 401(k) account, though details are sparse at this point.

“This can be done using a flat tax credit for those who save for retirement compared to allowing savings for retirement to come out of paychecks on a pre-tax basis,” Zovistoski said. “But those in higher tax brackets may see a reduction in the tax benefit relating to saving for retirement, if the flat rate is too low.”

According to The Urban Institute, Social Security accounts for about half of the income for adults aged 65 or older. Some of the funds supporting the program could be depleted by 2035.

Retirement Retirement Photo: Anukrati Omar/Unsplash