Under this option, the PIA for all retired or disabled workers would be the same; that amount would no longer depend on past earnings. Workers with high lifetime incomes would see reductions in benefits under this option compared with the benefits scheduled under current law. Some workers with low lifetime earnings would receive larger benefits than are scheduled under current law.
This option consists of two alternatives, both of which would take effect in January 2024. Under both alternatives, in any given year, Social Security benefits for all newly eligible beneficiaries at their full retirement age would be the same—an amount that would be determined relative to the federal poverty guidelines (commonly known as the federal poverty level, or FPL) for a single person. The FPL is $1,133 per month in 2022.
For both alternatives, eligibility criteria for Social Security benefits and adjustments to benefit levels for early and delayed claiming would remain unchanged from current law, and all disabled workers would be eligible for the flat dollar benefit upon entitlement. Additionally, both alternatives would provide benefits to dependents and survivors as under current law.
Under the first alternative, the flat benefit amount would be set to 150 percent of the FPL, which would equal about $1,770 per month in calendar year 2024. If implemented, the first alternative would reduce Social Security outlays by a total of $270 billion through 2032, according to estimates by the Congressional Budget Office.
Under the second alternative, the flat benefit amount would be set to 125 percent of the FPL, equaling about $1,480 per month in calendar year 2024. The second alternative would reduce Social Security outlays by a total of $593 billion through 2032.
Annual savings from both alternatives would continue to grow after 2032 as the new benefit structure applied to more beneficiaries and as average new benefits grew more slowly than they would under current law. The savings would continue to grow even after the new benefit structure applied to all beneficiaries as the effect of slower benefit growth compounded each year.