What You Need to Know About Potential Social Security Changes
February 14, 2023 | by FreeRetireCalc
Social Security is one of the largest and most important social welfare programs in the United States. It provides financial assistance to millions of Americans, especially those who are retired, disabled, or otherwise unable to work. However, the program is facing significant financial challenges, and lawmakers are considering changes to ensure its long-term viability.
Social Security is a vital source of income for many Americans in retirement, but recent proposals to change the program have caused some concern. In this post, we'll take a closer look at what's being proposed and how it could impact people currently in the workforce. We'll also provide guidance on how to ensure you're on track to meet your retirement goals, regardless of potential changes to Social Security.
Potential Social Security Changes
One of the most significant proposed changes to Social Security is to increase the full retirement age. Currently, the full retirement age is 66 for those born between 1943 and 1954, and it gradually increases to 67 for those born in 1960 or later. However, some proposals have suggested increasing the full retirement age to 68, 69, or even 70. This means that individuals would have to wait longer to receive their full Social Security benefits.
Other proposed changes include means-testing Social Security benefits, changing the way benefits are calculated, and adjusting the payroll tax rate. Means-testing would reduce benefits for those with higher incomes, while changing the way benefits are calculated could result in smaller benefit amounts. Adjusting the payroll tax rate could result in higher taxes for some workers.
Impacts to People Currently in the Workforce
The proposed changes to Social Security could have significant impacts on people currently in the workforce. Here are some potential impacts to consider:
- If the full retirement age is increased, individuals will have to work longer before they can retire and receive their full Social Security benefits.
- Means-testing and changing the way benefits are calculated could result in lower benefit amounts for some individuals.
- Higher payroll taxes could reduce take-home pay for some workers.
Actions to Take Now
Regardless of potential changes to Social Security, there are steps you can take now to help ensure you meet your retirement goals. Here are a few key actions to consider:
- Estimate your Social Security benefits using the free retirement calculator. This can help you understand how much you can expect to receive in retirement and plan accordingly.
- Consider delaying your retirement to maximize your Social Security benefits. Delaying your retirement can result in larger benefit amounts.
- Start saving for retirement now. Even small contributions to a retirement savings account can add up over time and help you meet your retirement goals.
- Review your retirement plan regularly and adjust it as necessary. This can help you stay on track and adjust for any potential changes to Social Security.
Potential changes to Social Security can be concerning for many people, but there are steps you can take now to help ensure you meet your retirement goals. By estimating your Social Security benefits, considering delaying your retirement, and starting to save for retirement now, you can prepare yourself for any potential changes to the program. And by staying informed about proposed changes and their potential impacts, you can make more informed decisions about your retirement planning.
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