Are these big changes for Social Security benefits?
Q. I read that there will be major changes in social security in 2020, including that those who turn 62 in 2020 will be exempt from the increase in retirement age from 65 to 67 years. I also read that for those born in 1960 or earlier, the retirement age will be raised to 67 years old. And that those who reach full retirement age in 2020 will not be able to leave portions of the benefit to the surviving spouse. Is this true?
– Still working
A. You can bet that there will be changes in social security, but it seems that your reading is not true. Or, at least, we don't know yet what changes Congress will make and when.
The Social Security program provides workers and their families with benefits, disability and survivor's benefits, said Stephen Craffen, a certified financial planner with Stonegate Wealth Management in Oakland.
He said that workers earn these benefits by paying into the system during their working years.
"Over the program's 84-year history, it has collected approximately $ 21[ads1].9 trillion and paid out $ 19.0 trillion," Craffen said. "Social security's total costs are projected to exceed total revenues in 2020 for the first time since 1982."
He said that costs are expected to exceed revenue each year because the number of recipients is increasing rapidly as the Baby Boomer generation retires. He also said that lower birth rates have persisted since the Baby Boom, so fewer people are contributing to the system.
Craffen said that the latest analysis from Social Security Trustees projects that cash reserves will run out by 2034, but will not be bankrupt. At that point, all beneficiaries are likely to get 20 percent benefits across the board unless Congress vomits the system before, he said.
"There is no doubt that policy makers will need to lower Social Security's cost growth, increase program revenue, or both," he said.
Along the way, Craffen said, Social Security will have to address imbalances in funding.
He said that the last time Social Security almost depleted the reserves was in the early 1980s, when Congress gave the program a greater degree by gradually raising the full retirement age from 65 to 67 and starting to tax benefits based on income levels.
You can use this calculator to determine your full retirement age.
Also note that there have been changes in how social security benefits are calculated for married couples. You can read more about it here.
"The faster changes are made, the less serious they will be," Craffen said. "Restoring solvency today would require a corresponding 22 percent increase in payroll taxes, a 17 percent reduction in all benefits, a 20 percent cut for new benefits, or a combination. Acting now will also allow politicians to phase in changes gradually."
If you are worried about future benefits, here are some ideas on how to prepare.
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Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook . Sign up for NJMoneyHelp.com & # 39; s weekly email newsletter.