Sam Johnson Introduces Bill to Give Social Security Beneficiaries More Choice

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Washington, June 29, 2017 | comments

WASHINGTON, D.C. – Today, Social Security Subcommittee Chairman Sam Johnson (TX-03) and Rep. Adrian Smith (NE-03) introduced the Providing Choice for Social Security Retirees Act (H.R. 3112).  This legislation would provide Social Security Old-Age (OASI) beneficiaries an option to claim a portion of their delayed retirement credit in a one-time, partial lump sum. 

 

“As a constitutional, free market conservative, one of the fundamental values I support is choice for the consumer,” said Johnson.  “And while Social Security is an earned benefit, that doesn’t mean it has to be one-size-fits all. Folks across the nation have widely varying career choices, health situations, and financial needs.  With this in mind, choice is important when it comes to claiming Social Security benefits.  Folks already have the option to claim their earned benefits either early, on time, or later on down the road.  But today’s bill goes one step further.  It allows folks who choose to delay claiming their benefits past full retirement age the additional option to claim part of their delayed retirement credit as a lump sum in advance – whatever works best for their needs.  This is a bipartisan idea, and I look forward to seeing this commonsense bill signed into law so that all Americans have greater choice when it comes to their retirement.”         

 

“A modernized Social Security should allow seniors to make their own retirement decisions rather than pressure them to conform to a one-size-fits-all program,” said Smith.  “This new option will ensure seniors who choose to remain in the workforce have greater flexibility to determine how they access their benefits.”

 

Things to Know about the Providing Choice for Social Security Retirees Act:

  • The Providing Choice for Social Security Retirees Act creates the option for individuals who are eligible for Delayed Retirement Credits (DRCs) to receive some of the benefit increase up front in the form of a “lump sum DRC”.
    •  Those above their Full Retirement Age (FRA) may choose to receive 2 percentage points (one-quarter) of the annual 8 percent DRC as a lump sum for each year they delay claiming.  The remaining 6 percentage points are added to the monthly benefit amount, as under current law. 
    •  The lump sum would be actuarially fair, meaning that it would be equal to the present value of the expected lifetime benefit increase, and would depend on assumptions about interest rates and average life expectancy. 
  • This approach improves retirement security by providing flexibility and choice for beneficiaries. 
  • The lump sum DRC is a bipartisan idea.  Peter Orszag, a former advisor to President Clinton and President Obama, proposed the option in a 2001 paper, and it was included in Chairman Sam Johnson’s 2016 solvency plan.  

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