Biden addresses 401(k) availability, tax breaks, caregivers in retirement proposal
Low- and middle-income workers would get a tax break when they put money away for retirement.
The Biden Plan for Older Americans on the Democratic presidential contender’s campaign web site also calls for increased protections against age discrimination in the workplace and strengthening Social Security.
For 401(k)s, the Biden Plan will equalize benefits across the income scale, so that low- and middle-income workers will also get a tax break when they put money away for retirement.
Many current plans are poorly designed to help them, the website says – about two-thirds of the benefit goes to the wealthiest 20% of families.
The tax breaks run the gamut from increasing the amount seniors don’t have to pay to the IRS when they buy long-term care insurance and pay for it using their savings for retirement to letting workers continue to take advantage of the Earned Income Tax Credit (EITC) when they pass 65.
Biden’s web site calls EITC one of the most effective strategies for helping low-wage workers achieve a living wage.
To make long-term care more obtainable, he is proposing a $5,000 tax credit for informal caregivers such as family members and other loved ones as a financial incentive to keep them providing the service.
Additionally, caregivers who aren’t able to make contributions to retirement accounts because they are taking time out of the workforce to care for an elder would be allowed to make “catch-up” contributions when they return.
Caregivers would also be aided by another part of the Biden Older Americans agenda: a requirement for hospitals to equip them with instructions and information when their loved ones are discharged.
The requirement is in the AARP-endorsed Caregiver Advise, Record, Enable (CARE) Act, which has been passed in 39 states.
Social Security strengthening is also on the Biden seniors platform. His plan calls for removing the $137,700 ceiling on which earnings are taxed for the Social Security trust fund to help avoid benefit cuts from insolvency.
Currently, the fund is projected to run out of money in 2035. Continuing contributions to Social Security at the current cap would mean benefits for retirees would be cut by about one-fourth.
The candidate’s plan envisions the oldest beneficiaries, those who have been receiving retirement benefits for at least 20 years, receiving higher monthly check to help protect their standard of living from being threatened by dwindling retirement savings.
Workers who spent 30 years in the labor force would get a Social Security benefit of at least 125 percent of the poverty level.
Surviving spouses would be in line to keep a higher share of the benefits of their deceased partners.
“This will make an appreciable difference in the finances of older Americans, especially women (who live longer on average than men), raising the monthly payment by about 20 percent for affected beneficiaries,” the Biden senior plan asserts.