There has been a lot of talk about raising the retirement age in the US over the past few months. In a question to the Congressional Budget Office (CBO), Congressman Brendan Boyle asked what would happen to benefits if the retirement age was raised from 67 to 69.
His main question was how raising the full retirement age (FRA) would affect people in different ways depending on their gender, income, and the year they were born.
The Congressional Budget Office just replied to Boyle. Here are the most important points to keep in mind.
Raising the retirement age will lead to lower Social Security benefits
The CBO says that people whose benefits would be touched by raising the full retirement age (FRA) would all see their lifetime Social Security income go down.
If workers put off getting their retirement benefits for the same number of months as the FRA rise, they would get the same monthly payment for a shorter amount of time.
It would be less money for workers for the same number of years if they decided to retire at the same age as they would have under current law. It would be better for the program’s budget if social security payments were cut.
Based on current law, these figures assume that Social Security will continue to pay benefits as planned, even if the trust funds for the program are in bad shape.
The Congressional Budget Office (CBO) says that if all of Social Security’s trust funds were combined, they would run out of money (hit zero) in fiscal year 2034.
This means that the combined amount would not be able to cover the difference between scheduled payments and yearly trust fund earnings.
If the CBO’s predictions had instead assumed that benefits were limited to the amounts due from certain funding sources after the scheduled date, they would be less than what was planned.
In 1965, the full retirement age was 67 years and 3 months. For people born in 1972 or later, it rose by 3 months for each birth year until it reached 69 years and 3 months.
The oldest age to start getting retirement benefits is 62, and if you start getting them more than 36 months early, each month you get them will be 5% less.
Under the proposed policy, the monthly benefit cut would be bigger for everyone who claims benefits before reaching their FRA than it is now.
The benefit reduction is based on the monthly benefit amount, also called the main insurance amount (PIA), that a person would get if they made a claim after meeting their FRA.
For instance, if a worker born in 1972, whose FRA is 67, chose to start collecting benefits at age 62 instead of their FRA, their monthly payments would be cut by 30% under the current rule.
On the other hand, if their FRA was 69, as it would be under the policy in question, their benefits would be 40% less than their main insurance amount.
Under the plan, people who started getting retirement benefits after their FRA would still get more money (up to age 72) than people who started getting benefits at their FRA.
To think about the policy’s two-year increase in the FRA and the age at which delaying the claim of higher retirement benefits stops being helpful.
What would be the estimated effects of the new retirement age on Social Security benefits?
The CBO looked at the average lifetime Social Security benefit as a percentage of average lifetime earnings and the average annual benefit that retired workers would get if they claimed benefits at age 65 to figure.
Out what would happen to retirement benefits if the proposed increase in the FRA was put into action.
CBO found out what each measure would do for different groups of people by looking at things like their gender, the quintile of their lifetime family income, and the decade they were born. 4.
Raising the FRA would slightly increase the amount of money the government spends on disability insurance (DI), but it would not have a direct effect on the payments workers who meet Social Security’s requirements would get.
Also see:-Benefits from Social Security will go up by $2,000 – Soon, this new law will become law
