3 Social Security Rules That Don’t Change Now, But They Could Change In The Future | personal financing

(Morri Bachmann)

Social Security has been around for decades. But this does not mean that the program is not subject to changes. In fact, some aspects of the program tend to change every year, such as the maximum monthly benefits and earnings test limit.

social Security You also face some financial challenges which can lead to lower interest along the streak. The problem is that with baby-boomers exiting the workforce in droves, there won’t be enough young workers to replace them, and thus push into Social Security. As this mass exodus occurs and baby boomers begin to file benefit claims, Social Security will have to indulge in its trust funds to make up the significant shortfall in revenue.

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These trusts won’t last forever, however, recent forecasts are making their money run out by 2035. As such, lawmakers are working through various solutions to prevent interest cuts from falling.

Now all of the following changes are hypothetical in that they are not static. And just to be clear, they won’t happen in the next couple of years. But at some point, Social Security may undergo many changes that can affect seniors and working people alike.

1. Full retirement age later

Currently, the full retirement age (FRA), the time when seniors can collect their full monthly benefits based on their pay dates, is 67 for anyone born in 1960 or later. Lawmakers have suggested bringing the FRA back to 68 or 69 to give Social Security more financial breathing space.

The rationale behind this suggestion is that Americans live longer than they did in years past, so asking people to put an extra year or two into the workforce isn’t unreasonable (although retirement doesn’t always go hand in hand with a demand for social security , often does). And while workers may not be happy with the idea of ​​having to wait longer to collect their benefits in full, it’s easy to see why paying the FRA back a few years could help Social Security so much.

2. No more wage cap

The main source of income for Social Security is the money he gets from payroll taxes. But workers do not pay these taxes on all their income. Each year, the wage cap determines how much earnings are subject to Social Security taxes.

This year, the maximum wage is $147,000, so earnings above that point are not taxed for Social Security purposes. But some lawmakers have suggested scrapping the wage cap and making workers pay Social Security taxes All of their income as a way to generate more revenue for the program.

3. Means test benefits

Currently, anyone who pays into Social Security can collect benefits starting at age 62. This means seniors with hundreds of millions of dollars in assets can get Social Security on a monthly basis.

Some lawmakers have proposed means of testing seniors for Social Security eligibility — meaning, reducing, or even eliminating benefits for wealthy seniors who don’t need the money. Obviously, there would be a lot of backlash if this proposal gained too much traction. But it is a solution that has been discussed many times before in the context of helping Social Security meet its financial challenges.

be ready

None of these changes are official as of today, and even if they do happen, we won’t see a new implementation of finances assessment, abolishment of maximum wages, or a means-testing system within the next year or two. But it is important to be prepared for the fact that at least some of these changes may occur in the future.

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