Fox News’ Chris Wallace will moderate the first presidential debate tonight in Cleveland, Ohio. Wallace will be asking the candidates about the economy, the integrity of the election, COVID-19, and other topics. One major topic that will be left out is retirement security. For today’s blog, we’re going to explore where each of the candidates stand on retirement issues and what actions they’ve taken or proposed on retirement security. NPPC is not endorsing one candidate over the other.
President Donald Trump
Although his campaign website does not mention retirement security or pensions, as the incumbent, President Trump has considered the following policies:
- During his current term, he signed an executive order which “seeks a review of how required minimum distributions from 401(k) plans and individual retirement accounts are calculated, and for regulators to see how small businesses can more easily band together to offer retirement plans to their workers.”
- According to Erich Wagner at Government Executive, the Trump administration’s proposed 2020 fiscal budget had a line item that would have expanded the government’s Thrift Savings Plan, which is essentially a defined contribution 401(k)-style retirement plan for future federal employees while locking them out of the defined benefit federal pension.
- This year, President Trump implemented a payroll tax deferral program through the end of the year. The President has made clear that, if he is re-elected, he will try to make the payroll tax deferral a permanent cut. According to CNBC, the Social Security Administration found that if the tax cut were permanent, the Social Security fund would be depleted by mid-2023. Research by the National Institute on Retirement Security highlights that 40 percent of older Americans rely solely on Social Security for retirement income.
Former Vice President Joe Biden
As a presidential candidate, former Vice President Joe Biden has laid out an extensive plan for older Americans that includes strengthening Social Security, equalizing the tax benefits of defined contribution 401(k)-style retirement plans, and eliminating penalties for public workers. Here are snippets of the candidate’s plan from his website:
- Eliminate penalties for teachers and other public-sector workers. Current rules penalize teachers and other public sector workers who either switch jobs or who have earned retirement benefits from various sources. The Biden Plan would eliminate these penalties by ensuring teachers not eligible for Social Security will begin receiving benefits sooner – rather than the current ten-year period for many teachers. The Biden Plan will also get rid of the benefit cuts for workers and surviving beneficiaries who happen to be covered by both Social Security and another pension. These workers deserve the benefits they earned.
- Equalizing the tax benefits of defined contribution plans. The current tax benefits for retirement savings are based on the concept of deferral, whereby savers get to exclude their retirement contributions from tax, see their savings grow tax-free, and then pay taxes when they withdraw money from their account. This system provides upper-income families with a much stronger tax break for saving and a limited benefit for middle-class and other workers with lower earnings. 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.
- Expand the Earned Income Tax Credit (EITC) to older workers. The EITC is one of the most effective strategies for helping low-wage workers achieve a living wage. Unfortunately, the EITC is not available to workers once they turn 65, putting them at a distinct disadvantage relative to their younger peers. As president, Joe Biden will allow low-wage older workers to claim the tax credit they deserve.
With 35 days to go until Election Day, we hope this is a helpful guide on where the two candidates stand on retirement security.
