For good reason, senior voters’ primary worry is Social Security. In 2022, Social Security payouts replaced roughly 37% of historical earnings for American citizens who retired at the age of 65, according to the nonprofit Centre for Budget and Policy Priorities. Recent calls for modifications to Social Security included raising the age when individuals in their 20s would be qualified to receive the full benefit by former presidential individual Nikki Haley. Here are some potential effects of hiking the retirement age on retirees.
The Board of Trustees of Social Security stated in its 2023 annual report that, barring adjustments from Congress, the Social Security trust fund might run out in 2034. More specifically, benefits would only be paid for by 80% of the fund’s yearly tax receipts. Congress is mindful of the impending issue, despite politicians’ reluctance to face reality. The latest major adjustment to Social Security was made by Congress in 1983, raising the full retirement age for anyone born in 1960 or later to 67. The FRA is currently being proposed by Congress to be raised to 69, with increments taking place gradually over eight years, starting in 2026.
Some Changes Would Be Accepted More Than Others
Social Security is such a rod of lightning that any modifications would almost certainly spark a lot of controversy and outrage. But raising the pay base cap is one suggestion that might prove more politically acceptable. The cap was raised from $160,200 in the year 2023 to $168,600 in 2024. Therefore, employees who make exceeding $168,600 this year will not be subject to the payroll tax for Social Security on the excess.
The oldest individuals impacted by the FRA in the year 1983 were 23 years old when it was raised by Congress. The majority of 23-year-olds are unlikely to be overly upset about the move because they aren’t concerned about their Social Security payment, which they won’t receive for another 40 years. Furthermore, many of today’s younger workers don’t think Social Security will still be around when they’re old enough to start receiving benefits, so they might be less interested in any modifications that might be made.
Obstacles To Increasing The Full Retirement Age
Medicare, Medicaid, Social Security, and other entitlement programs make up a sizable amount of the national budget. Nevertheless, it’s getting more and harder for tax money to pay for those programs. In the meanwhile, people generally don’t think well of any politician who declares their intention to cut benefits.
It is unlikely that the age at which full benefits are payable will be raised soon, considering how unpopular modifications to entitlement programs are with voters. Employees in the United States who were born in 1957 or prior are already qualified to receive their entire Social Security benefit. If your birthdate is between 1943 and 1954, your full retirement age is 66. If you were born between 1955 and 1960, your full retirement age is progressively raised to 67. At age 67, full retirement payments are payable to anyone born in 1960 or after.
