French workers are demonstrating in protest as President Emmanuel Macron pushes for a pension reform that would raise the national retirement age from 62 to 64. over 1 million I attended last week’s demonstrations, after garbage collectors went on strike, piles of garbage piled up and public transport was severely disrupted.
Meanwhile, U.S. lawmakers are considering changes to state qualification programs, and some say the country should raise the full retirement age.
The Congressional Budget Office says lawmakers are due, and the trust fund that pays their retirement benefits is set to go bankrupt around 2032. This does not mean that the system will completely collapse, but benefits could be cut by 20% across the board.
These reductions will impact both current and future beneficiaries. Alicia MannellDirector of the Center for Retirement Studies at Boston University.
“I have to do something,” she said. “You either need to bring in more income or cut back on your spending.”
Why do we need social security reform?
The US population is aging and the birth rate is declining. This means that younger Americans are providing less tax revenue to cover Social Security benefits for older generations.
Some Republicans say raising the full retirement age could be the solution. Republican Research CommissionHouse Republican caucuses.
Former South Carolina Gov. Nikki Haley, a 2024 presidential candidate, said earlier this month: she supports raising the retirement age For Americans in their 20s. Other RepublicansSenator John Kennedy of Louisiana and Rep. Nancy Mace of South Carolina have also said legislators should discuss raising the retirement age for young people.
What is your retirement age?
People can now retire at age 62 and receive reduced benefits. not until 70 Maximum benefits are awarded under delayed retirement credits, “Full Retirement Age” Technically, anyone born after 1960 is 67.
There are certain provisions related to full retirement age, such as rules for benefits for widows and spouses. be reduced If claimed before benchmarking.
The term is misleading as it has nothing to do with the official retirement age, but raising the full retirement age could lead to cuts in benefits to retirees.
If the full retirement age is raised to 70, Nearly 20% cut In terms of profits, according to the Center on Budget and Policy Priorities, a nonpartisan research and policy agency.
While some white-collar workers can easily undertake several years of work before retirement, those with physically demanding jobs may retire early and receive reduced benefits. The cuts would be even more severe if the retirement age were raised.
People who are currently 62 and claim social security benefits early Receive 70% of available benefits at age 67These workers will be able to receive it if the retirement age goes back to 70. Only 55% of the benefitsaccording to Manner.
“It puts the biggest strain on the most vulnerable people,” she said.
Option 2: Bring in more revenue
Another option lawmakers are considering is putting more money into Social Security.
Some are considering expanding the payroll tax. Currently, this tax only applies to wages up to $160,200. Tax rate 6.2% for both employees and employers or 12.4% For self-employed people.
Senators Elizabeth Warren and Bernie Sanders introduced legislation last month that also applies to payroll taxes. Wages over $250,000.
Another option is to raise tax rates for employers and employees. Mark Airey Former Senior Advisor to the Secretary of the Treasury and now Adjunct Senior Fellow at the Brookings Institution
“Obviously, every possible solution has tradeoffs,” says Iwry. Tax increases are “always painful and generally unpopular.”
Iwry also said a Social Security tax hike could make it more difficult to raise taxes for other high-priority purposes such as Medicare, international crises such as the war between Russia and Ukraine, and climate change. pointed out.
Another proposal has been to invest at least part of the social security reserves in private sector stocks and bonds that tend to yield higher returns over the long term, but which could also help to increase profits during market downturns. There are concerns that the
“Kick the can on the way”
While benefits are not at risk of being cut over the next decade, Iwry said lawmakers should work to address the issue as soon as possible.
“Every year we wait until we find a solution to avoid these benefit cuts, for which we have to pay a higher price,” he said. “We’re kicking the can on the way, and with each kick it gets heavier.”
Retirement may not be a top priority for people under the age of 30, but they should be aware that Social Security is likely to change and plan ahead. Craig CopelandDirector of Benefit Studies at the Employee Benefits Institute.
That could mean setting aside additional funds for retirement, planning to work longer, or figuring out how to solve retirement “in stages” by taking part-time jobs after retirement. I have.
“I don’t think anyone should think that Social Security is going away,” he said. “Some funds will be provided for profit.
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