Social security coffers are about to dry up. It has been speculated that funds will be gone by 2033, and benefits for all might be sharply reduced by almost 60%.
To avoid this situation, there is a proposal to raise the full retirement age. This is not just a mere speculation but a possible scenario. If this gets approved, it may come as a rude shock to those who are closing in on the retirement age of 67.
As per the recent discussion, the retirement age can be increased to 69. This scenario is now part of the public debate to shore up the finances for social security. There are millions of Americans who are currently in their 40s and 50s and for them this decision and possible shift would be more critical. This will affect their own retirement plan.
As of now, the full retirement age is 67 for anyone born in 1960 or later is 67. This means that those who are seeking full social security benefits have to wait till 67.
For anyone who was born a little before 1960, like in 1959, the FRA is 66 years and 10 months.
In the last few decades, the rise in FRA has been gradual. But now that the issue of empty funds is almost real, policy makers are scrambling for solutions. There is a debate for more aggressive measures and one such change that is being pushed is for the FRA to be higher for future retirees.
There are few other proposals under consideration and they can completely change how much one can claim when it comes to the full benefit and when they can make those claims.
One of the prominent proposals suggests raising the FRA by three months each year from 2026 to 2033. This will eventually make the FRA 69. However there are others who have suggested for the increase to be slower, such as only a month or two per year. Whichever suggestion policymakers may choose, the end result would remain the same. The retirement age would go beyond 67.
One relief right now is that none of these proposals is legal yet. In fact, the Social Security administration has said that raising FRA is not under active consideration; however, one has to remember that social security funds will diminish soon and everyone’s benefits will be reduced.
That’s why, rather than placing all our hopes in the hands of policymakers, financial experts are asking people to start preparing now. They suggest that everyone calculate the monthly need, considering their FRA to be 69. Then begin saving accordingly. These could be smaller amounts yet, saving nonetheless.
Experts also suggest putting some extra money into tax-advantaged retirement accounts, high-yield savings accounts, or CDs that beat inflation.
It’s better to be prepared than to be surprised. The earlier you prepare, the more control you’ll have over your financial future, regardless of what Congress decides.
