8 ways the government can cut your Social Security benefits
There's arguably no program more important to senior citizens during retirement than Social Security. Though Medicare's importance is growing over time, no social program tops the guaranteed monthly payout that nearly all seniors receive from Social Security in retirement. And 62% of aged beneficiaries lean on this benefit to provide at least half of their monthly income.
However, the federal government through policy action can alter Social Security income. Some actions could raise additional revenue for the program, ultimately buoying or even lifting scheduled payouts. Meanwhile, others are aimed at cutting long-term program expenditures and, in many cases, reducing monthly and/or lifetime benefits.
Whether you realize it or not, there are eight ways the federal government could take this latter approach and cut your Social Security benefit.
1. Raise the full retirement age
One of the most commonly suggested solutions by Republicans for resolving Social Security's long-term (75-year) cash shortfall of $13.2 trillion, as estimated by the latest Trustees report, is to raise the full retirement age.
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To resolve this, lawmakers could choose to gradually raise the full retirement age from its expected peak of 67 in 2022, for those born in or after 1960, to, say, 68, 69, or 70 years old. Afterward, retirees would either choose to accept a steeper discount in their monthly payout by claiming early, or they could wait longer to receive their full benefit. Either way, it results in a reduced lifetime Social Security benefit.
2. Link benefits to longevity
Another approach that's very similar to the idea of raising the full retirement age is to progressively link benefits to longevity.
What does that mean exactly? Rather than simply picking a number out of thin air and saying that by 2040 the full retirement age will be 69, lawmakers would index the full retirement age to U.S. life expectancies so that it changes each year to reflect increasing or decreasing longevity. The advantage here is that this method would eliminate the possibility of the life expectancy outrunning the increase in full retirement age, as we've seen for many decades now.
Additionally, linking benefits to longevity could also allow lawmakers to adjust when delayed-retirement credits max out, which is currently at age 70. Or, in other words, if retirees are willing to wait long enough, they could still earn in excess of 100% of their monthly payout, just as under the current system.
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https://www.msn.com/en-us/money/retirement/8-ways-the-government-can-cut-your-social-security-benefits/ar-BBMZ9Cv?li=BBnb7Kz
