If elected next week, Joe Biden has proposed changes in two areas critical to all Americans: taxes and Social Security.
Neither of these "mini plans" contain any revolutionary solutions to Social Security's impending dilemma, and they mainly increase taxes on higher-income individuals.
Yet even if they won't directly affect you, it's important to understand how they could very well impact you indirectly.
Let's start with Biden's proposed tax changes, which boil down to higher taxes for the wealthiest Americans.
According to the Mooresville Tribune, Biden proposes three different ways to increase taxes:
1. For those making more than $400,000, Biden plans on raising their marginal tax rate from 37% to 39.6%. And he also plans to increase taxes on corporations, which can then pass the increase onto consumers in the form of higher prices.
2. The ceiling for payroll taxes would be reinstated for those earning over $400,000. (Currently, it is slated to be capped at $142,800 in 2020.)
3. The tax rate for long-term capital gains could be bumped from 20% to 39.6% for those making more than $1 million.
There's no way to say today if any of these proposals will be enacted. Then again, it's possible that all of them could happen.
It's also debatable whether Biden's plan to raise taxes on wealthier Americans would help the economy or close deficits. If wealthier Americans find ways to avoid these new taxes, then lower income classes wouldn't get much help.
Plus, the ideas that Biden is proposing have been put forward by other politicians before. They may look good on the surface, but it's little more than the "same old" attempts used by previous politicians.
So then what about Biden's "big plans" for Social Security?
Will Social Security Get Enough of Biden's Attention?
According to a Motley Fool piece, the Democratic candidate has also proposed three changes to Social Security:
1. A higher monthly minimum benefit for low-income earners.
2. Higher survivors benefits (an increase of 20%).
3. Utilizing the payroll tax increase on wealthy Americans (as described above).
The Fool piece finishes by shining a light on what Biden's proposals need to accomplish to be meaningful for retirement savers:
Countless Americans are invested in seeing Social Security remain viable on a long-term basis. Right now, the program is facing a funding deficit that could result in benefit cuts within the next 15 years, and that could leave millions of current and future beneficiaries dangerously cash-strapped.
Should Biden emerge victorious from the election, ask yourself: Do you have confidence that his plans will solve this hefty problem? If your answer is "no", then you might want to ensure that your future doesn't rely solely on Social Security.
Develop Resilience No Matter Who Wins the Election
Any proposals to solve the Social Security dilemma seem unsatisfactory, as they don't seem to solve any underlying problems. Politicians seeking election almost always talk a good game, but then the game never seems to end.
And it might already be too late. Granted, a collapse of Social Security won't happen overnight, but before we get to 2034, that could change fast.
So, on the chance that things get tight it's best to work as hard as you can to create a retirement savings plan that is resilient.
Holding assets such as physical gold and silver can help provide a solid store of value, and hedge against uncertainty.
Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver. Discover more by clicking here now.
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