You’ve likely read the headlines about the Social Security Board Of Trustees announcing the program’s cash reserves are projected to run out in 2035. This doesn’t mean the Social Security program will go bankrupt but, without cash reserves, it may result in a reduction of benefits for retirees.
Since the announcement, there have been a number of proposals floated by members of the Senate to help shore up the Social Security program’s cash reserves. One of the most popular ideas is to raise Social Security’s Full Retirement Age (FRA), also known as the Normal Retirement Age (NRA), from 67 to 70.
The FRA/NRA Recently Capped Out At Age 67
Your FRA/NRA is the age established by the Social Security Administration (SSA) that makes you eligible for 100% of the benefit you’ve earned. In 1983, after several studies indicated the Social Security program was in danger of becoming insolvent, President Reagan passed amendments gradually increasing the FRA/NRA from 65 to 67 over a 22-year period. Currently, for retirees born in 1960 and later, the FRA/NRA has capped out at age 67. You can check your FRA/NRA with the Social Security Calculator.
“Opponents point out that many retirees will likely die before they become eligible for Social Security at 70.”
The King-Cassidy Plan
A plan proposed by Senators Angus King (I-Maine) and Bill Cassidy (R-Louisiana) would change the way the Social Security benefit is calculated while raising the FRA/NRA age to 70. This would cut benefits by reducing the total Social Security payments collected in a retiree’s lifetime.
Opponents point out that many retirees will likely die before they become eligible for Social Security at 70. In fact, the SSA estimates that one out of eight people age 20 today will die before age 67. Other estimates indicate that 20% of people born in 2015 will die before reaching age 70.
The Sanders-Warren Plan
A different plan proposed by Senators Bernie Sanders (I-Vermont) and Elizabeth Warren (D-Massachusetts) would expand Social Security benefits by raising payroll taxes on households earning more than $250,000 annually while gradually raising the payroll tax cap to $250,000. The Senators point out that their plan would increase Social Security benefits by about $2,400 per year without raising the FRA/NRA to 70. Add to this, they estimate their plan would keep the program solvent for the next 75 years.
It’s important to note that Congress has yet to vote on either of these plans and, for the time being, the FRA/NRA will remain at age 67 for those born in 1960 or later. Then again, since changes to Social Security are inevitable, connect with an FRC® trained advisor to get the latest information.
