Raising the minimum wage to $15 could add over $100,000 to Social Security benefits for many workers

Saturday, August 10, 2019
By Alessandra Malito, MARKETWATCH

More than doubling the federal minimum wage is quite the controversial proposal currently sitting in Congress, but there’s no debate about one facet of the concept: doing so would boost Americans’ retirement savings.

The House of Representatives recently passed the Raise the Wage Act, which would increase the minimum wage across the country from $7.25 to $15 an hour by 2025. The bill still needs to get approved in the Senate and then by the president, but if it were to pass as is — or somewhat similar to its current form — it could mean adding thousands of dollars to many American’s retirement income.

Higher wages would allow workers to put more of their money in a retirement account, even if it was still a low percentage of their salaries (say 3%, which is a typical rate companies use to automatically enroll new hires). But the impact of raising the minimum wage goes beyond an individual’s own savings rate and affects other aspects of retirement planning — especially Social Security.

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