Here’s a government retirement proposal we can (sorta, kinda) get behind—delay retirement a few months in order to spend more time with your newborn.
Senator Marco Rubio, R-Florida, recently unveiled the Economic Security for New Parents Act, legislation that creates an option for new parents to “pull forward” a portion of their Social Security to use for paid parental leave after the birth or adoption of a child.
It’s similar to a plan to delay retirement benefits in order to pay down student loans.
At a press conference with Representative Ann Wagner, R-Missouri, on Thursday, Rubio said the bill specifically allows parents to use the benefit to take at least two months of parental leave, which is enough to finance two months of leave at up to 70 percent of wages for nearly all parents making below median family income.
Many parents, especially those with low incomes, will be able to finance three months of leave or longer with the amount of the benefit, which is transferable between households.
Two-parent households will be able to transfer their benefit to their spouse. For example, one parent could use the benefit for two weeks of leave, while the other uses their individual benefit as well as the other parent’s benefit for at least 6 weeks.
“Stay-at-home” parents with an earnings history that meets eligibility requirements will also be able to take the option.
Parents taking the option will delay the date at which they begin receiving Social Security retirement benefits by about three to six months per benefit taken, as determined by the Social Security Administration each year.
“It’s important to note that when Social Security was created 83 years ago it was created for addressing a pressing economic insecurity of that time and that was the fact that elderly Americans found themselves living in squalor and poverty after they were no longer able to work and provide for themselves,” Rubio said at the press conference. “Now 83 years later, an additional and new economic insecurity has emerged, and it’s the fact that millions of Americans are thrown into economic distress when a new child is born, and they have to go weeks without a paycheck.”
The conservative Independent Women’s Forum applauded the idea, claiming it will “have little effect on Social Security’s long run finances and will not change anything about retirement benefits for those who do not elect to use this new option.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
