SOCIAL Security bosses are considering raising the retirement age for recipients, but the trust funds that support it are running dry.
This change would force Americans to work for longer before they could qualify for financial support.
Social Security recipients could see the retirement age increase[/caption]
The rules state that the earlier you retire, the less Social Security you are eligible to claim each month.
The idea was floated back in June and met with a negative reaction from Medicare campaigners, who said that Americans were “scared” of the changes ahead.
On Thursday, Social Security Administration Commissioner Frank Bisignano told Fox News that younger generations will likely face different rules when they retire.
He said: “Remember, most people told you and me Social Security wasn’t going to be around.
“And so the generations that are coming in will probably have a different set of rules than we had.”
Bisignano further confirmed that the Social Security Administration is considering the retirement age move.
Republican lawmakers had previously hinted at raising the retirement age to 69 by 2033.
The current full retirement age is 66 for those born between 1943 and 1954.
It is then 67 for those born from 1960 onward, but the new rules would push this to 69 for people born in the 1970s or later.
MILLIONS LOST
One of the main impacts of a raised retirement age would be that Americans would work longer for ultimately less benefits.
It would affect roughly 257 million people, or approximately three out of four Americans.
Those who are currently between 30 and 59 years old would feel it the hardest.
It would lose them $420,000 in benefits in their lifetimes, or an annual loss of $3,500.
If the change took another 20 years to be fully implemented, it would still be quicker than the rise that came before it.
Where to save your retirement money
There are several different places where you can put the money you save for retirement. Each has different tax advantages, but not all of them are available to everyone.
401(k) – an employer-sponsored retirement account. Contributions are made pre-tax and many employers will match a certain percentage of your contributions. Taxes are paid when the funds are withdrawn in retirement.
Roth IRA – an individual retirement account. Contributions are made post-tax but withdrawals in retirement are not taxed.
TSP (thrift savings plan) – a retirement savings and investment plan for Federal employees and members of the uniformed services. They work similarly to 401(k)s but may have more limited investment options.
Pension – an employee benefit that commits the employer to make payments to the employee in retirement. Pensions are becoming increasingly rare.
The retirement age shift from 65 to 67 took 33 years to come in.
FUTURE CUTS?
This benefit loss would represent a 13% cut to Social Security benefits in total.
The Social Security Administration’s two trust funds are projected to reach insolvency by 2034, per Fox, which is in just nine years.
Once the funds are depleted, recipients would face a mandatory benefit cut unless Congress reformed the program.
According to the nonpartisan Committee for a Responsible Federal Budget, beneficiaries would face a 24% benefit cut on average.
The Congressional Budget Office (CBO) previously said that the 13% cut only delays the problem by one year, pushing projected insolvency to 2035.
The Social Security Administration’s two trust funds are projected to reach insolvency by 2034, per Fox, which is in just nine years[/caption]
