A proposed adjustment to the Social Security system could have significant implications for future retirees. According to a recent analysis, gradually increasing the full retirement age to 69 would result in lower lifetime benefits for individuals and reduced overall spending by the program. However, this change would not be enough to prevent the expected depletion of Social Security’s trust funds in 2034.
Under the proposed plan, the earliest age for claiming Social Security benefits would remain 62, but the age for receiving maximum benefits would increase to 72. This means that individuals would need to wait longer to receive their full benefits, resulting in reduced lifetime payouts.
The analysis suggests that workers born in 1972 or later would be most affected by this change, with their benefits reduced by up to 40% if they claim Social Security at the earliest possible age. Even those who wait until age 65 to claim benefits would see an average reduction of 13% compared to current law.
While increasing the full retirement age would reduce Social Security spending in the short term, it would not have a significant impact on the program’s long-term solvency. The trust funds that support Social Security are still projected to be depleted in 2034, despite the proposed changes.
Experts note that the impact of this change would be limited, as it would only affect new beneficiaries, who account for a small percentage of total spending. Furthermore, the phase-in period for the change would be gradual, meaning that the full effects would not be felt until after the projected insolvency date.
As policymakers continue to explore solutions to ensure the long-term viability of Social Security, it is clear that more comprehensive reforms will be necessary to address the program’s financial challenges.
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