Social Security could be slashed by 25% - but retirement age rise might save your benefits
Social Security payments are at risk for future retirees but certain proposals could help save peoples' benefits.
Social Security payments could be slashed by around 25 percent if changes are not made, according to experts.
According to the 2023 annual report of the Social Security Board of Trustees, the surplus in Social Security trust funds will be depleted by 2034.
Experts are citing that if this happens then benefits could be reduced by nearly 25 percent for all recipients.
Doug Carey, a chartered financial planner and the owner of Wealthtrace, is among the many considering various reforms to the retirement system which will safeguard senior benefits.
Said reforms include increasing the retirement age threshold and raising the payroll tax cap on Social Security.
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Speaking to Daily Express US, Mr Carey shared why raising the retirement age may be essential to making sure Social Security benefits are secure going forward.
He explained: “The current full retirement age is 66, but will be age 67 for those born in 1960 or later. Increasing the retirement age could help the system by reducing the number of people claiming benefits at an earlier age.
“This would also reduce the total amount paid to all recipients over their lifetime.”
The financial planner also shared that increasing the payroll tax cap is another Social Security could be saved.
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As it stands, payroll tax for the benefits system is applied to claimants with an income of up to $160,200.
According to Mr Carey, raising or eliminating this cap is another way to generate money for the program.
It should be noted that this would require higher-income individuals to contribute more while they receive no gain which could result in backlash for this policy.
Finally, the finance expert urged policymakers to consider means-testing retirement benefits to make sure those who are most vulnerable are prioritized for getting support.
Currently, all Americans are entitled to some level of Social Security if they accrue the 40 credits needed to be eligible.
These 40 credits are the equivalent of 10 years of unemployment with people getting the full amount once they reach the retirement age.
Mr Carey added: “Introducing means-testing for Social Security benefits could reduce payments to higher-income retirees.
