U.S. President Donald Trump speaks during a meeting with Republican members of Congress in the state dining room at the White House in Washington, the United States, on May 8, 2020.
Tom Brenner | Reuters
President Donald Trump would consider another way to get more money for struggling Americans by allowing them to advance on their social security benefits.
Many Americans are eager to get more financial help from the effects of the coronavirus as the government finishes sending millions of $ 1,200 checks to eligible people.
However, some Republican lawmakers are widening their heels at the prospect of sending more money because of the high price.
According to the Washington Post, the Trump administration plans to prepay social security retirement benefits to workers before they are eligible. Generally, workers must be at least 62 years of age and have worked and contributed to the system for at least 10 years in order to receive benefits.
More from Personal Finance:
Consumer advocate Richard Cordray fears the rise of “vehement” debt collectors
130 million stimulus checks were carried out. Here are which states got the most money
It pays to stay unemployed. It could be a good thing
A proposal that the White House plans to ask the Americans to leave up to $ 5,000 in social security in exchange for delaying their benefits in the future.
The $ 5,000 would be structured as a loan with an interest rate set by the government that would repay the social security trust fund with interest. Individuals who opt for the program would repay this money when they start receiving social security benefits. Their first checks would be used to repay the loan, for a period of up to three months. After that, they would receive normal benefits.
The plan was developed by Andrew Biggs of the American Enterprise Institute and Joshua Rauh of the Hoover Institution of Stanford University.
Social security advocates fear that this may be the start of efforts to cut the program. Currently, about 45 million retirees depend on social security, with average monthly benefits totaling $ 1,503.
In a statement, Richard Fiesta, executive director of the Alliance for Retired Americans, criticized the proposal.
“Asking American workers to forfeit one cent of their future social security benefits to survive the current economic crisis is a far-fetched idea that will hurt families for decades to come,” said Fiesta.
This is not the first time that the idea of borrowing against social security benefits has been proposed, said Richard Johnson, director of the retirement policy program at the Urban Institute, a non-partisan think tank. . A proposal would have allowed people to borrow against their future benefits in order to obtain paid parental leave.
But these ideas do not coincide with the basic reason why Social Security was created in the first place – to provide disability protection and financial security in old age, said Johnson.
“These proposals fundamentally change the way we think about social security,” said Johnson.
Joe Elsasser, president of Covisum, a social security software company, said he was skeptical of the idea.
“I am not a fan, mainly because I think it is the most vulnerable people who would be affected,” said Elsasser.
This would include those most in need of social security for longevity protection and old age insurance, he said.
And even if such a plan could be structured to be actuarial fair and therefore not to harm social security funding, it could still be detrimental to the results of Americans.
“People are always surprised how much it will cost in 40 years to get $ 5,000 today,” said Elsasser.
The White House declined to comment.