The Social Security Administration (SSA) is exploring a potential modification to the retirement age, a shift that could affect a large portion of the U.S. population, potentially reaching up to 257 million Americans by 2033.
The proposed plan, which has garnered attention from the Republican Study Committee, suggests a gradual increase in the full retirement age (FRA) to 69.
This adjustment would begin in 2026, sparking concerns about its long-term effects on future retirees, particularly those between the ages of 30 and 55.
According to The Sun, the impact of such a change could have widespread financial implications for millions across the country.
How the Retirement Age Change Could Affect Your Benefits
The proposed increase in the FRA could mean major financial losses for those affected. Individuals may lose as much as $420,000 in lifetime Social Security benefits.
This would result in about $3,500 less annually in benefits during retirement, which typically lasts around 30 years.
Such a reduction amounts to a 13% annual cut, although the impact could vary, with some retirees losing more, and others losing less.
Who Will Be Affected the Most?
The individuals most impacted by the potential change are those currently between 30 and 55 years old.
This group stands to lose the most in benefits due to the abrupt nature of the proposed change.
In addition, workers in physically demanding industries, such as construction, healthcare, and service work, will feel the effects more acutely, as they are less likely to be able to work into their late 60s due to the physical toll of their jobs.
A Slow Rollout, but a Major Shift
The proposed change to the FRA would not be immediate.
Instead, it would unfold over a period of eight years, starting in 2026 and gradually increasing to 69 by 2033.
This slow implementation stands in contrast to the previous increase in the retirement age, which saw a more gradual shift from 65 to 67 over a span of 33 years, starting in 1983.
Potential Strain on the Social Security System
While the proposed changes may seem like a solution to the looming financial troubles within the Social Security system, they would only marginally delay the depletion of the system’s trust funds.
According to the Congressional Budget Office, the Social Security trust funds are expected to run dry by 2034.
However, the changes in retirement age and the corresponding benefit cuts would only extend that timeline by a single year, pushing the depletion to 2035.
Moreover, experts predict that an increase in the retirement age could lead to a spike in the number of people seeking disability benefits, further straining the Social Security Disability Insurance system.
These individuals, unable to work due to physical or mental strain, would likely turn to disability benefits instead, potentially overburdening the system.
What Can You Do to Prepare?
Financial experts are advising Americans to adjust their retirement plans to account for potential reductions in Social Security benefits.
They recommend recalculating savings and potentially increasing 401(k) contributions by 2-3% to offset the expected benefit cuts.
Additionally, workers are encouraged to consider other retirement savings options such as Roth IRAs, Health Savings Accounts, and other investments to help supplement Social Security payments.
Ongoing Changes and Delays at SSA
Alongside this proposed change to the retirement age, the Social Security Administration is also facing significant delays due to administrative changes.
Millions of checks may be disrupted, and employees have warned of massive delays as a result of these shifts.
Additionally, another major change could affect 400,000 individuals daily, which is expected to be completed this year.
As the situation continues to evolve, it’s clear that millions of Americans will be affected by changes to Social Security, and many will need to reassess their retirement planning to ensure they are financially secure.
