Millions of older people rely on Social Security to get by in retirement. They are expected to be followed by millions more in the future. Social Security has a big problem with not having enough money.
The problem is that most of the money for the program comes from payroll taxes, which workers pay out of their wages. But as more and more baby boomers leave the workforce in the coming years, benefits’ main source of income is likely to shrink.
Social Security has a big problem with not having enough money. The problem is that most of the money for the programme comes from payroll taxes, which workers pay out of their wages. (Photo: https://www.sharewise.com/)
Social Security can pay out scheduled benefits by taking money from its trust funds, but only until those funds run out of money. From there, if the program doesn’t have enough money to pay for everything it needs to do, benefits could be cut.
Lawmakers really don’t want benefit cuts to happen because they could lead to a national crisis of elderly poverty. So, they have been putting out different ideas to try to fix benefit’s finances. One idea has been getting some support, but that doesn’t mean it’s the best solution.
Is it a good idea to raise the age when you can get all of your Social Security benefits?
At full retirement age, or FRA, workers who have paid into benefits can get their full monthly benefits based on how much they have earned. At the moment, FRA is 67 for anyone born after 1960.
Some politicians want to raise the FRA. In the budget from the Republican Study Committee, the FRA for benefits is slowly raised up to age 70. That would make the FRA for people born in 1978 or later 70, not 67. The proposed changes would not affect anyone over 55, nor would they affect people who are already getting Social Security benefits.
Some lawmakers think it’s a good idea to raise FRA, others don’t agree. For one thing, this change is based on the idea that people can work until they are 70 years old. Because of health, that isn’t always possible. And people who are against raising the FRA say that workers without degrees and people of color might find it hard to work past their 70th birthdays.
People might still file for Social Security benefits earlier
Some people might find it scary that they can’t retire until they’re 70. If this plan goes through, it’s possible that a lot of new benefits recipients will choose to take their benefits before FRA, which is already an option.
This means agreeing to a lower monthly benefits for the rest of your life. But many people may be willing to take that financial hit if it means they can retire at a better age.
If a lot of people apply for benefits early after FRA is raised, it could still put a lot of pressure on benefits limited funds. So, this proposal is still a good one, but it’s not perfect, and it could be a solution that makes a lot of people very unhappy.
Most retirees forget all about the $21,756 benefits bonus.
If you’re like most Americans, you’re behind on saving for retirement by a few years or more. But a few “Social Security secrets” that not many people know about could help you make sure your retirement income goes up. For example, a simple trick could make you up to $21,756 more per year.
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