A NEW retirement change plan could impact 257 million Social Security recipients, and see them lose $3,500 a year.
The significant change to the Social Security system would see a massive cut to benefits across the board and leave thousands scrambling for an alternative.
A new retirement change plan could impact 257 million Social Security recipients, and see them lose $3,500 a year[/caption]
Earlier in June, The US Sun reported on the record rate of people filing for Social Security benefits.
The claimant number is now on track to hit 4 million Americans, putting pressure on an already struggling system.
This number marks a 17% increase to 1.8 million new claimants this year through May compared with the same 2024 period, according to the Social Security Administration (SSA).
The SSA already provides services to nearly 70 million retirees, and is facing renewed pressure under Donald Trump.
The President has slashed SSA staffing from 57,000 to 50,000, despite him promising not to touch the department.
This is down from the SSA’s 63,000 employees a decade ago in 2015.
All of this has led to fears that in the next decade, the SSA will be forced to massively cut benefit rates.
The SSA has projected that its trust fund to pay beneficiaries, given that it is giving out more money than it is taking in through taxes.
It is thought that this fund will run out in 2035, triggering a 20% cut to benefits, meaning recipients will get less financial support.
Max Richtman, president of the National Committee to Preserve Social Security and Medicare, told CBS: “I have attended several town halls around the country, and many people have asked if they should claim benefits early given Trump and [Elon] Musk’s interference in the system.
“People are scared, and they’re not sure what to do.”
MASSIVE CHANGE
Now, an element to the Republican budget proposal for 2025 includes increasing the retirement age to 69 by 2033.
Currently, the full retirement age is 66 for those born between 1943 and 1954, and 67 for those born from 1960 onward.
The new proposal would push this to 69 for individuals born in the 1970s or later.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here’s how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
- 401(k) Plans
- A 401(k) is a retirement account offered through employers, where contributions are tax-deferred.
- Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings.
- Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority.
- IRAs
- An Individual Retirement Account (IRA) offers another avenue for retirement savings.
- Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices.
- Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.
This change would mean prospective beneficiaries would have to work longer if they want to receive the maximum amount of support from the SSA.
It would also mean Americans have to work longer for reduced benefits.
This would impact approximately 257 million people, or three out of four Americans.
The proposal could result in each affected American losing up to $420,000 in lifetime benefits, or an annual loss of $3,500.
Those between 30 and 59 right now are the ones set to be the most impacted by the proposal.
It would begin in 2026 and rapidly increase the retirement age compared to previous increases.
For example, the retirement age shift from 65 to 67 took 33 years to fully implement.
DEEP CUTS
It represents a 13% cut to Social Security benefits, which still doesn’t hit the projected 20% mark.
This suggests cuts could become worse at the SSA.
The Congressional Budget Office (CBO) believes this would only delay the depletion of the SSA trust fund by one year.
The committee thinks this 13% cut will have a limited impact and fail to address the long-term financial challenges facing the SSA.
Democrats have heavily criticized the proposal, calling it a betrayal to the middle class and an attack on seniors, veterans, and working class families.
The proposal could result in each affected American losing up to $420,000 in lifetime benefits, or an annual loss of $3,500[/caption]
