The Republican Study Committee, which consists of four-fifths of Republicans in the House of Representatives, recently called for a radical shift in retirement policy that would tie Social Security eligibility age to life expectancy. This proposal was a key component of the fiscal 2025 budget proposal. It also included the suggestion to reduce benefits for high earners and a phase-out of auxiliary benefits for people in the highest income brackets.
The proposal seems almost a direct response to President Joe Biden’s State of the Union address, in which he pledged to protect Social Security, Medicare, and the current retirement age. The Republican proposal sets the stage for an election year battle between the two parties.
A Year of Conflict between Republicans and Democrats
Republicans have defended their position by saying that phased retirement age changes have been a hallmark of past negotiations. This shift is necessary to protect the Social Security nest egg. At the current retirement age, economists project that the Social Security trust fund will run out by 2033. Slowly shifting the retirement age will help maintain solvency of this fund so that its benefits can be enjoyed for more than just the coming decade.
Despite their recent proposal, the Republican position remains somewhat of a mystery considering the likely presidential candidate will be Donald Trump. Historically, Trump has pledged to safeguard Social Security and Medicare. However, he more recently said that there was a lot that can be done in terms of cutting entitlements to extend the life of those benefits.
At any rate, the future of Social Security and Medicare will be an important issue during this election year. The House Budget Committee Chairman recently advanced a budget resolution asking for a bipartisan committee to negotiate the solvency of Social Security and Medicare. However, no specific policy recommendations were included.
In contrast, the proposal from the Republican Study Committee would reduce Social Security spending by $1.5 trillion in the coming decade. In addition, Medicare spending would be cut by $1.2 trillion over the same time. According to Republicans, the proposal’s doesn’t involve cuts, since people near retirement age would not be affected. At the same time, Democrats have been firm about not increasing the age of eligibility.
Murky Plan Proposals Coming from Both Political Parties
Currently, Democrats do not have much to push back on, since the Republican proposal leaves out key details. The vague language says that there will be “modest” changes to coverage for people who aren’t close to retirement and earn “more than the wealthiest.” None of these statements get quantified. Adjustments to the retirement age are called “modest” and in line with increases in life expectancy, which is also vague. Auxiliary benefits would get phased out for people with a high income, but again, there are no specifics.
Despite this lack of detail, the proposal quantifies savings as $16.6 trillion over the course of a decade and promises a balanced federal budget by 2031. This will partly be achieved through the implementation of a premium support model in which Medicare Advantage plans compete with the federal plan and changing the model through which residency programs get paid to train physicians.
President Joe Biden released his 2025 budget proposal a few days after the Republican proposal. This plan includes an increase in taxes for people earning more than $400,000 to support Medicare moving forward. This group currently pays a 3.8 percent tax that would be increased to 5 percent. Biden’s plan similarly posited that wealthy Americans should pay more to support Social Security, but there were no specific numbers offered.
Later statements seem to imply that the actual structure of the tax would change. Currently, the Social Security tax applies only to the first $168,600 of income. This could change next year to bring more money to the retirement program. Notably, Biden has not been consistent on the question of retirement age. In 1983, he supported an increase from 65 to 67, so there is always the chance that Democrats become more receptive to negotiations.
Immediate Reactions to the Republican Proposal
At the same time, opposition to raising the retirement age may be significant. Already, academics have come forward to quantify the health impact of increasing the age. Scholars have pointed out that much of the health benefits of retirement stem from the sense of independence and self-governance that comes with no longer having a job. Forcing people to work longer deprives them of this experience and reduces the health benefits that come with retirement.
In other words, increasing the retirement age may shorten life expectancy, at least among certain populations. This could result in the need to decrease the age down the line, especially if retirement age gets tied to life expectancy. While this is mostly an academic exercise, it does highlight the potential problems with making changes to something so closely tied to the health of Americans.
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Meta Description: Anyone with an estate plan should regularly review it to ensure that all the fine details are in line with expectations and changing circumstances.
Title: Spotlight on 4 of the Most Important Actions You Need to Take in Your Estate Plan Review
While some events, such as moving to a new state or purchasing a new home, will cause you to review your estate plan, it is important to take the time to look at these documents regularly. Most professionals recommend that estate plans be reviewed every three to five years. Doing this at designated intervals helps account for new assets, or changes in family circumstances that may have been overlooked and gives you the opportunity to think critically about the extent to which the plan as it stands aligns with your goals. Moreover, it’s a great time to ensure that the plan minimizes taxes to the extent possible and helps your beneficiaries avoid probate.
Below are four of the key steps to take in a comprehensive review of estate plans.
1. Double check asset titles and beneficiaries.
In estate planning, it is important to keep close track of what happens to assets in the event of your death. After all, the entire point of estate planning is dictating what happens to your assets in the future and ensuring you leave the legacy you want. For people in certain states, or with large and complicated estate, your assets should ideally be titled in the name of your revocable trust. When this isn’t possible, each asset should have transfer-on-death beneficiaries named. As you review your estate plan, double check that beneficiaries are named and are accurate for all your assets. Remember that this includes bank and brokerage accounts, real estate, stock, and even partnership interests.
If any asset is held in your personal name without a transfer beneficiary designation, it will go to probate upon your death, incurring additional cost and delaying transfer of the assets. Assets that are jointly held will go to the other owner, provided they have rights of survivorship and are also alive.
With tax-deferred retirement accounts, and insurance policies, there are named beneficiaries, so these assets do not go through the probate process ( unless you have named your estate as the beneficiary). A common recommendation is to designate a spouse as primary beneficiary, followed by children or nieces and nephews, or other loved ones, such as sisters and brothers and friends. Also, a revocable trust may be a useful tool on this front whether you are married or single. Some estate planners suggest that single individuals should list the revocable trust as the primary beneficiary. Likewise, the revocable trust can be the beneficiary of life insurance policies, unless you have an irrevocable life insurance trust. Plan reviews are the time to ensure all your assets are accounted for and are titled appropriately.
2. Ensure all fiduciary roles are filled appropriately.
All estate plans should appoint people to fill the appropriate fiduciary roles. An important part of the review process involves looking over these roles and the people chosen for them to ensure it continues to be a good fit. Some important fiduciary roles to consider are successor trustees and guardians for any minors under your care. In the event of special needs or circumstances, guardians may also be required for adults.
Remember that adult children will have to create their own estate plans and thus could have less time to devote to your needs. In some cases, appointing different guardians for different wards have may be necessary. Also consider the people named on your documentation for durable power of attorney and healthcare power of attorney. Are these still the best people for those respective jobs? Or course, if you make changes, this needs to be a conversation with the former representative and any new ones.
3. Compile your most important records.
Any estate plan review should include important records, such as account information and contact points for various investments, and insurance policies. Create a single, central repository of all these records and arrange them in a logical manner so that they are easy to locate. Then, make sure that executors and POA agents and family members have access to them when the need arises. Any storage location should be both accessible and keep your documents secure.
Your original last will and testament should be among these records, as well as copies of trust documentation and the healthcare and finance durable power of attorney documents. In addition, you can include guidance related to your funeral, including an outline of any arrangements already made and a statement of key expectations.
Some other data points that do not always get included are contact numbers for friends and family members, as well as key professionals like medical doctors, financial advisors, accountants, and lawyers. Having this information in one place can make things much easier for executors. If you have digital assets, you should include usernames and passwords for all of them. These assets can include cell phones, email accounts, online banks, social media, and cryptocurrency wallets. People named as inheritors of these assets may not actually have access to them without these details.
4. Limit liability and tax burden.
Part of the reason to establish an estate plan is to minimize any tax burden, and to reduce the time and effort involved in settling your estate, and to limit the overall liability of inheritors. Some of the biggest liabilities for an estate comes from property. With every estate plan review, it is important to look at newly acquired property and consider transferring it to a limited liability company (LLC). This will help protect you and future asset owners from liability and becomes especially important if that property is rented, as lawsuits are more common with rental properties.
Your ownership interest in the LLC should be in the name of your revocable trust unless you hold an irrevocable trust. In terms of tax burden, you should know that the current aaprox. $12 million base tax exemption for estates in the United States is set to fall to approx.. $7 million in 2026. If your estate already exceeds this amount or will after 2025, you should speak to an estate planner to figure out legal mitigation strategies and begin to implement them.