America is facing a looming crisis as generations of workers who mostly participated in do-it-yourself savings plans — or no plan at all — approach retirement. Though a few high-income households have amassed small fortunes in tax-favored retirement accounts, such as 401(k)s and IRAs, at least half of working households are expected to see a steep drop in their living standards once they retire due to the decline of traditional pensions, a lack of savings and cuts to Social Security. That not only poses big risks for America’s seniors, but it threatens the US economy as well. Members of Congress are waking up to the problem and proposing a flurry of Social Security expansion plans that could help alleviate the crisis.
One of the most promising bills, championed by Rep. John Larson, would expand benefits by 2% for most workers — more for low earners. It would raise enough revenue to fund these benefits and to close a projected shortfall by slowly increasing the payroll tax rate and by taxing earnings above $400,000. Earnings above $132,900 aren’t currently subject to Social Security tax, but most expansion plans, like Larson’s, would scrap or amend this cap to raise revenue. So far, Larson’s proposal has garnered a lot of support from fellow Democrats, with more than 200 sponsors.CNN Op-Ed