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The One Suggestion to Keep Social Security Solvent Most Americans Are Against - MSN.com
Social Security has faced insolvency before, and once again Congress will have to make some difficult decisions to keep it solvent and avoid a 22% cut to all Social Security recipients as early as 2032. The Trust Fund consists of two parts, Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI). DI has enough funds to pay full DI benefits until 2098. Congress has in the past authorized blending the two funds to address shortfalls. If this is done, Social Security would be able to pay full benefits through 2034, at which time all benefits would be reduced by 17% versus 22%.
Congress is once again considering raising the full retirement age (FRA), and it keeps coming back to the top of the list. This is as Congress is trying to keep the Social Security Trust Fund solvent without any immediate effect on retirees. Back in 1983, a bipartisan Congress agreed to raise the FRA from 65 to 67. But they did it slowly and in increments. Social Security faced a financial crisis in the early 1980s as a result of rising payroll tax revenues from a growing workforce and an increased life expectancy. It was to reduce long-term costs without cutting benefits to those already receiving Social Security.
The increase to the FRA was gradually phased in:
- 1937 or earlier: FRA remained 65
- 1938–1942: FRA increased by 2 months per year
- 1943–1954: FRA reached 66
- 1955–1959: FRA increased by 2 months per year
- 1960 or later: FRA reached 67
They are once again considering doing the same thing. If it passes, it is not expected to affect anyone who has already turned 62.
David Maina has written an article on the pros and cons of raising the FRA once again. Read his full article here…
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