There are millions of Americans who rely on Social Security and unfortunately, the program is under pressure. The Social Security Trust fund is running low and if no changes are made, the fund could be depleted within the next decade.
To add to this, people are living much longer than when Social Security was created and this means that the government is sending out more checks that it used to. There’s more money going out of the system, than money coming in.
In short, the math doesn’t add up. Raising the retirement age is one way the government hopes to ease the strain.
What the New Plan Looks Like
So, what exactly is changing?
- Full Retirement Age (FRA): Currently, people are eligible to collect benefits at age 67. As per the new plan, this FRA could move up to 68 or 69 as time goes by.
- Gradual changes: The increase won’t occur completely at once. Rather, it will be implemented gradually, perhaps impacting younger employees more than those who are nearing retirement.
- Early retirement still possible: Beneficiaries may still collect benefits at the age of 62, however there will be larger penalties because the FRA will be higher.
Who Will Feel the Impact?
Not everyone will notice the changes right away.
- Current retirees won’t see their benefits reduced. The new rules won’t take away money from people who are already collecting.
- Those who are approaching retirement age may only see small changes.
- Younger workers will feel it the most, especially those in their 30s or 40s, as the retirement age will be raised.
In simple terms, those who are closer to retirement, don’t have much to worry about. However, the younger generations will feel the impact, therefore it is important to plan ahead.
Why Some People Are Worried
Being realistic, people are concerned because not everyone can work late into their 60s.
- People who work in tougher jobs: Those who work in demanding fields such as construction, industry or healthcare may find difficulty to work a few extra years.
- Those with health issues: Not everyone will live long enough to enjoy extra years of retirement, especially lower-income groups who often face worse health outcomes.
- Unequal impact: Those Americans who are wealthier, tend to work in less demanding jobs will be able adapt to the change more comfortably.
That’s why critics argue this move could hit the most vulnerable the hardest.
The Political Fallout
Many advocacy groups in favour of seniors were not happy about this. In addition to this, experts are also concerned about the budget.
What You Can Do Now
If you’re worried about how this will affect you, there are a few steps to take:
- Check your retirement plan: See how a later retirement age would change your income.
- Increase your savings if you can: Try and make extra contributions to retirement accounts that you may have.
- Stay informed: Make sure you stay informed and keep updated with verified information so that you are aware of what’s happening.
Final Thoughts
Even though the decision to raise the retirement age won’t affect anyone right away, it will still impact younger workers. They would now have to change their plans for retirement and work according to the new ages. For current retirees, it’s reassurance that their benefits won’t be cut.
Social Security is continuously changing, and it is important that beneficiaries keep up. The goal is a peaceful retirement. Beneficiaries must consult with a financial advisor if they need assistance make to financial decisions.