Are these big changes for Social Security true?


Q. I read that in 2020, there will be big changes to Social Security, including that those who turn 62 in 2020 will be exempt from the increase in retirement age from 65 to 67 years old. I also read that for those born in 1960 or earlier, the retirement age will be raised to 67 years old. And that those reaching the full retirement age in 2020 will not be able to leave part of their Social Security benefits to the surviving spouse. Is this all true?
— Still working

A. You can bet there will be changes to Social Security, but it seems whatever you read isn’t true. Or, at least, we don’t yet know what changes Congress will implement and when.

The Social Security program provides workers and their families with retirement, disability and survivors insurance benefits, said Stephen Craffen, a certified financial planner with Stonegate Wealth Management in Oakland.

He said workers earn these benefits by paying into the system during their working years.

“Over the program’s 84-year history, it has collected roughly $21.9 trillion and paid out $19.0 trillion,” Craffen said. “Social Security’s total cost is projected to exceed its total income in 2020 for the first time since 1982.”

He said the cost is expected to exceed income every year because the number of beneficiaries is rising rapidly as the Baby Boomer generation retires. Also, he said, lower birth rates have persisted since the Baby Boom so fewer people are contributing to the system.

Craffen said the most recent analysis by Social Security Trustees projects that it will run out of cash reserves by 2034 but will not be bankrupt. At that point, all beneficiaries will likely face a 20 percent across-the-board benefit cut unless Congress shores up the system sooner, he said.

“There is no doubt that policymakers will need to slow Social Security’s cost growth, increase the program’s revenue sources, or both,” he said.

Along the way, Craffen said, Social Security will have to address funding imbalances.

He said the last time Social Security nearly depleted its reserves was in the early 1980s, when Congress shored up the program by gradually increasing the full retirement age from 65 to 67 and started to tax benefits based on income levels.

You can use this calculator to determine your full retirement age.

Also note there have been changes to how Social Security benefits are calculated for married couples. You can read more about that here.

“The sooner changes are made, the less severe they will need to be,” Craffen said. “Restoring solvency today would require the equivalent of a 22 percent increase in payroll taxes, a 17 percent reduction in all benefits, a 20 percent cut to new benefits, or some combination. Acting now would also allow policymakers to phase in changes gradually.”

If you’re concerned about future benefits, here are some ideas on how to prepare.

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This story was originally published on Sept. 2, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.