Let’s first decode the current issue. Under the existing Social Security Act, the calculations of benefits for widows or widowers can get murky, especially if both spouses were previously earning. In some cases, the death of one spouse can lead to a significant reduction in social security benefits for the surviving spouse.
Now let’s delve into the proposed changes. The new legislation, if passed, would amend the calculations of survivor benefits under the Social Security Act to ensure that widows and widowers from two-income households continue to receive sufficient benefits.
In simple terms, the POWR Act aims to enhance the income security of senior citizens who have experienced the loss of a spouse. The changes proposed fall under two categories: the widow’s insurance benefit and the widower’s insurance benefit.
In each case, the new monthly benefit shall be equal to either the deceased individual’s primary insurance amount or 75% of the total of any old-age or disability insurance benefit for which the widow(er) is entitled for that month, as well as the primary insurance amount of the deceased individual. Here, the primary insurance amount is essentially the baseline figure used in the calculation of retirement and disability benefits.
However, the POWR Act also includes a caveat. The sum calculated for insurance benefits should not exceed what the primary insurance amount would have been for an individual who earned an income equivalent to 1⅓ times the national wage index each year.
Additionally, the POWR Act carefully aids those on Supplementary Security Income (SSI) by ensuring the changes won’t negatively impact their eligibility. In other words, the altered benefit amount under the POWR Act should not disqualify an individual from receiving SSI benefits by inadvertently pushing their income beyond the eligibility limit.
The bill does not detail the source of funding for this change in legislation, which is a question that will likely need addressing as it continues to journey through the legislative process.
So, what’s next for the POWR Act? It has been referred to the Committee on Ways and Means, the chief tax-writing committee in the House of Representatives. From then, it will have to navigate its way through the Senate and gain executive approval before entering into law.
Clearly, the most direct beneficiaries from this legislation will be widows and widowers from two-income households, specifically those who are retired or disabled. By addressing the current payout anomalies in the Social Security Act, the legislation is a crucial step in providing more predictable and secure financial futures for surviving spouses.
Looking at the broader picture, the POWR Act fuels the ongoing debate about the sustainability and fairness of social security benefits. As an aging American population continues to lean on social security as a key source of income, the pressure is on to ensure the legislation is capable of providing a safety net for all citizens later in life, particularly for those who outlive their spouses.
