The retirement age is beginning to become a real issue in the United States. According to the Social Security Administration, the full retirement age will be increased in two-month increments each year until it reaches 67. This increase began in 1991. Now comes the concern. Full retirement age will finally reach 67 in 2026. This will, therefore, apply to those born in 1960 and later.
The implementation of the Full Retirement Age came during the 1983 Social Security amendments, with Ronald Reagan as president at the time. This amendment, which we discussed earlier, stipulated that the age at which a beneficiary could claim full benefits would gradually increase. Why? At the time, it was argued that with increasing life expectancy, the retirement age could be extended.
Monthly deduction of up to 30% if applies before the stipulated age
Regarding deadlines, whether early or late, there are certain guidelines to keep in mind. For one thing, if a person applies for retirement benefits before the stipulated age, they will receive a monthly deduction of up to 30%. If they apply for these benefits at the corresponding age (66 in 2025), they will receive 100% of the benefits to which each person is entitled. Finally, if the option is to postpone retirement, this would allow the interested party to access larger amounts; this is because applying late could result in an income equal to approximately 124% of the corresponding benefit.
One of the problems with this implementation will fall on younger people, since if the rule is modified in any way, those who will have to retire in 20 or 30 years will not know what the requirements will be based on. Not to mention that with inflation, lifestyle changes, and the cost of living, the state’s coffers are in jeopardy, as is the proper functioning of state entities.
The Old-Age and Survivors Insurance (OASI) Trust Fund is expected to be depleted by 2033
As we’ve discussed in previous articles, the Old-Age and Survivors Insurance (OASI) Trust Fund is expected to be depleted by 2033. OASI will be able to pay 100% of total benefits through 2033, but by then the fund’s reserves will be exhausted, and the program will be unable to cover the estimated 77% of benefits by that date. On the other hand, the Disability Insurance (DI) Trust Fund is expected to be able to pay 100% of benefits through 2099. The fact is that if both funds are combined (OASDI), 100% of scheduled benefits could be paid through 2034. By that year, the fund’s reserves would be exhausted, and total revenue would be sufficient to pay 81% of total benefits.
OASDI fund worsened this year primarily due to three factors
The projected long-term finances of the combined OASDI fund worsened this year primarily due to three factors. First, the Social Security Fairness Act repealed the Windfall Elimination and Government Pension Offset provisions of the Social Security Act. The impact of this legislation on the OASI Trust Fund was the primary contributor to the change in the combined OASDI fund depletion date this year. Second, the Trustees extended the assumed period of recovery from historically low levels of fertility by 10 years. Third, the Trustees lowered the assumed long-term share of Gross Domestic Product (GDP) that accrues to workers in the form of labor compensation.
“Lawmakers have many options for changes that would reduce or eliminate long-term financial deficits. Acting sooner will allow for a broader range of solutions to be considered and provide more time to implement changes gradually, giving citizens ample time to prepare,” the official statement reads. The trustee statement is signed by Scott Bessent, Secretary of the Treasury, and managing Trustee of the Trust Funds; Lori Chavez-DeRemer, Secretary of Labor, and Trustee; Robert F. Kennedy, Jr., Secretary of Health and Human Services, and Trustee; Frank J. Bisignano, Commissioner of Social Security, and Trustee.
