If you have employees who are counting down the days until retirement, you may want to warn them that lawmakers are looking at making some changes.
Why? Because Social Security trust funds are running low. According to the most recent projections, by 2035 only 79% of promised benefits will be available.
Currently, President Biden doesn’t plan to raise the age of retirement, but his campaign platform called for Social Security reform.
What that reform will look like is still a mystery.
The last time the Social Security for full retirement age (FRA) was raised was in 1983. It went from 65 to 67. However, the change was phased in by adding two months to the FRA every year. So, people who were born in 1955 can retire in 2021 or 2022 at their FRA of 66 years and two months.
The “new” FRA of 67 actually won’t take affect until 2027, when people who were born in 1960 or later will reach 67.
New congressional research (tinyurl.com/SSRA620), which was updated Jan. 18, found that increasing the FRA could “prompt people to work longer, delay claiming benefits and receive monthly checks for a shorter amount of time.”
The study also found there could be a lot of consequences to raising the FRA to 69.
Pros of staying employed
Until our government figures all this out, you may want to encourage older employees to stay employed and remind them of three things:
- Early retirement at the age of 62 comes with reduced payments for claiming early.
- Full benefits can’t be claimed until they reach their FRA, and
- Waiting to claim benefits up until age 70, garners them the biggest monthly benefit checks possible at a 32% increase.
Info: The Social Security retirement age could change. What that could mean for benefits