The promise of Social Security has been well known for years. What exactly does this mean? Well, after many years of hard work, Americans could rely on a steady income during their retirement years. However, the government is now considering raising the retirement age and this change could affect millions of people.
Why the Retirement Age Is Being Talked About
Data suggests that the Social Security Trust fund which pays retirees, is running out of funds. If no changes are made, benefits could be cut by 2034.
Law officials are considering raising the retirement as way of saving the program. The goal of this is to make people wait a few years longer before collecting benefits, which will mean that they receive benefits for a few years shorter.
How the Retirement Age Works Now
As it stands, the Full Retirement Age (FRA) depends on when you were born. For anyone born in 1960 or later, it’s 67. You can claim benefits as early as 62, but your monthly payments will be permanently reduced.
Should the government decide to raise the retirement age, the FRA would go past 67. This would mean that future retirees would have to wait longer before being able to receive their full benefits. This would force people to work additional years before being eligible to claim Social Security.
Who Would Feel the Impact Most
Not everyone would be affected the same way. Those most likely to feel a pinch include:
- Those people who work in physically demanding jobs such as construction and healthcare may find difficulty working additional years.
- Lower-income workers, who rely more heavily on Social Security.
- Younger generation of employees in their 30s or 40s would now have to work longer before claiming benefits.
Pros of Raising the Retirement Age
Supporters say raising the age makes sense because:
- The life expectancy of individuals has increased now, that is why people are collecting Social Security benefits for more years as compared to when Social Security started.
- It helps the program stay solvent, making sure it can pay future retirees.
- Encourages longer work for those who can, helping them save more for retirement.
Cons of Raising the Retirement Age
Critics warn it could create problems:
- It may cause financial stress for those who are unable to work for longer years.
- Wider inequality, hitting lower-income workers harder than wealthier ones.
- As workers get older, they are at risk for health issues.
Possible Solutions
- Gradually raise the retirement age
- If the decision is made to increase the FRA, then it should be done in stages, gradually.
- This will allow workers to adjust their finances and retirement plans accordingly.
- Protect workers in physically demanding or high-risk jobs
- Ensures that raising the retirement age does not unfairly hurt those who cannot continue working longer.
- Increase revenue from higher earners
- This will increase the money coming into Social Security without cutting benefits for everyone.
- Overall goal
- The end goal is to ensure that Social Security is sustained for now and future generations to come without causing financial burden for retirees or workers
What You Can Do
Those who are approaching retirement, the goal is to plan ahead and make wise financial decisions. Where possible, look into other savings account or investments to avoid relying solely on Social Security.
In order to ensure that Social Security remains a dependable safety net, authorities must strike a balance between the program’s finances and equity.
The Bottom Line
Social Security could last longer if the retirement age were raised, but millions of Americans would be impacted, particularly those with lower incomes or those in physically demanding employment. It is important for beneficiaries to stay updated so that they are aware of what’s happening with their benefits.