MAJOR changes are underway at the Social Security Administration, impacting the age at which Americans can claim benefits.
A long-scheduled shift to Social Security’s full retirement age is now taking effect, impacting millions of near-retirees – and many are already expressing concern about their financial future.
Social Security recipients are seeing a big change over at the SSA[/caption]
The federal agency is rolling out a change to the program’s full retirement age[/caption]
The full retirement age, or FRA, is the age at which beneficiaries can begin to access their full Social Security payments without a financial penalty.
The full retirement age is now reaching its highest level, and the millions of impacted Americans will need to work even longer to start collecting their benefits.
Due to amendments to the Social Security Act implemented in 1983, the full retirement age officially increased from 65 to 67.
The update impacts those born in 1960 because they will turn 65 this year – whereas they would previously be able to claim their full benefits in 2025, they will now have to wait two more years until they turn 67.
Americans have spoken out on the change, expressing their frustration over the delayed benefits.
“Some of us do backbreaking work,” cried one worker on Facebook. “It’s pitiful the peanuts they leave us.”
Americans born before 1960 are not affected by the new change, as they can still retire and collect their full Social Security as long as they have reached the FRA for the year they were born:
- 1943–1954: age 66
- 1955–1959: age 66 and a certain number of months, increasing by two months each year:
- 1955: 66 and 2 months
- 1956: 66 and 4 months
- 1957: 66 and 6 months
- 1958: 66 and 8 months
- 1959: 66 and 10 months
Americans who wish to retire early are still able to begin claiming their benefits as early as age 62, but this results in a penalty to their monthly checks.
On the other hand, those who delay their retirement until age 70 can receive a significantly greater monthly benefit – up to $27,324 more annually.
AN UNCERTAIN FUTURE
The increase in Social Security’s full retirement age to 67 is the last scheduled increase stemming from the amendments to the Social Security Act over four decades ago.
The changes were intended to adjust for longer life expectancies and to counteract financial solvency problems related to Social Security.
Although the FRA is set for now, future legislation or executive action could increase the retirement age even more.
What is full retirement age?
Full Retirement Age, or FRA, is the age at which you become eligible to receive 100% of your Social Security retirement benefits, based on your lifetime earnings.
Also referred to as “normal retirement age,” your FRA is determined by the Social Security Administration based on your birth year:
- 1943–1954: age 66
- 1955–1959: age 66 and a certain number of months, increasing by two months each year:
- 1955: 66 and 2 months
- 1956: 66 and 4 months
- 1957: 66 and 6 months
- 1958: 66 and 8 months
- 1959: 66 and 10 months
- 1960 or later: age 67
For example, the Republican Study Committee is eyeing raising the FRA to age 69 by 2033.
In March, the committee announced its budget proposal, which included a call for “modest adjustments to the retirement age for future retirees to account for increases in life expectancy.”
If rolled out, the switch would affect 257 million retirees – primarily those between 30 and 55 years old.
The plan would take effect starting in 2026, with the retirement age slowly increasing up to 69 by 2033.
House Republicans justified the potential FRA raise by citing the Social Security program’s insolvency, with predictions that the trust fund for retirement benefits could be exhausted between 2033 and 2034.
When that happens, American retirees would only receive roughly 77% of their scheduled benefits, per a report by the Social Security Board of Trustees from last year.
Many Americans have expressed concern about the future of the social program.
“I am 50 next month and don’t expect Social Security,” said one Facebook user. “I’m screwed and so are the generations after me.”
As the SSA considers raising the retirement age yet again, Social Security claims are hitting record rates, sparking fears of massive payment delays.
Meanwhile, the federal agency has set out to make another “massive” change that could affect 400,000 daily.
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.
