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How Will Increasing Social Security’s Retirement Age Affect You?

How Will Increasing Social Security’s Retirement Age Affect You?

| April 02, 2024

The Social Security Administration has predicted for years that it will be forced to reduce Social Security benefits because of a growing funding shortfall. The agency is expected to reduce the benefits sometime after 2033 unless Congress makes some changes. One of the proposed changes is to raise the retirement age at which a retiree can receive full Social Security benefits.

The need to make changes to Social Security is because the agency has revealed that it will only be able to pay about 80 percent of the regular Social Security payments by 2034. Because so many people depend on that retirement monthly income, it would be disastrous for retirees and those planning on retiring soon.

Right now, anyone retiring can expect full benefits only if they retire at age 67 and a few months. The proposed change is to raise the retirement age to 70 when they can apply for Social Security and get full benefits. 

Although nothing has been agreed upon yet in Congress, here are some of the possible complications:

1) A Loss of Benefits

Retiring later will mean that many people, could receive fewer benefits because they do not live as long as other groups. 

2) Working Longer Would Be Necessary

Instead of retiring with full Social Security benefits at 67, many would have to work until they reach 70. 

3) Social Security Would Not Be Paying for Medicare

Whether or not the age of Medicare eligibility will also be changed does not appear to be an issue right now, although it is possible. However, with poorer health and the need that many will have for early retirement, people with lower incomes may not be able to afford Medicare benefits if full Social Security payments do not start until age 70. They would, however, still be required to buy it at age 65 if they had stopped working.

Taking Social Security before reaching full retirement age, which is possible, means getting reduced benefits. There is a possibility that the Medicare starting age, which is currently 65, will also have to be changed. Right now, it is mandatory to enroll around your 65th birthday unless you are still working. 

4) Other Retirement Income May Be Necessary

Because of the higher cost of living and inflation, many people may need to start drawing on their retirement accounts.

5) Maximum Benefits May No Longer Apply at 70

Right now, you can get the maximum Social Security benefits if you wait until 70 to begin receiving them. When, and if, the maximum benefits will still be available for those retiring at 70, it will likely cause confusion unless it also is moved to a later age. 

Whether you need help planning, investing, or identifying potential retirement gaps or just want to talk about your options, you can meet with one of our financial advisors at no cost.

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