Financial Connection
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Secure strategies
Anticipating and planning for changes in Social Security
by suze orman
Readers of my Connection column [“Patience pays off,” January 2023] told me that they understood the financial upside of waiting until age 70 to start claiming Social Security. But I also heard concerns about whether that strategy makes sense given the current conversations about Social Security benefits. Let’s take a look.
Not the first time for changes
We’ve been here before. Exactly 40 years ago, the government enacted Social Security reform to put the program on more solid financial footing.
A big change made in 1983 was to raise the full retirement age (FRA)—when you are entitled to 100% of your earned Social Security benefit—from age 65 to age 67.
This was based on the fact that by the 1980s people were living longer than in the 1940s, when benefits were first paid—an average of five years or more for men and women who reached the age of 65.
No overnight changes
This is important: The higher FRA that was enacted in 1983 was only applied to younger Americans. If someone was at least 46 years old in 1983, their FRA did not change. For everyone else, the shift was phased in based on birth year. For example, the current FRA (67) applies only to anyone born in 1960 or later. That means that when the change was made in 1983, the people whose FRA was shifted to age 67 were no older than 23! That’s a lot of time to adjust and plan.
I expect the FRA may be raised again, perhaps to age 70. But I don’t anticipate that the goalposts will be moved for people currently in their 60s.
The program could be shored up in other ways too, including raising the income limit for charging the Social Security tax. In 2023, the tax only applies to income below $160,200.
More than 90% of Americans surveyed by AARP a few years ago said Social Security is an important government program. I am betting that when Congress does address the issue, it will take care not to upend the financial security of those in retirement or nearing retirement.
Run your numbers
The Social Security website has a free calculator that will give you a personalized estimate of your benefits at different starting ages. You need to set up a free My Social Security account (ssa.gov/myaccount). Once registered, you can get estimates of your Social Security retirement benefits based on your earnings record on file. The tool shows your potential benefit at age 62, your full retirement age, age 70 and any juncture in between. You can also download your Social Security statement and your actual earnings record.—SO
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Suze Orman is an Emmy Award–winning TV host, New York Times bestselling author and host of the Women & Money podcast. Orman will answer selected questions in this column. She regrets that unpublished questions cannot be answered individually.
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