Interestingly, a 6.1% price increase would be the highest since 1983, when benefits increased by 7.4% year over year.
3. Full retirement age continues to increase
While you’re able to claim Social Security benefits at 62, and sign up for Medicare coverage at 65, the age at which you’re eligible for full benefits is continuously increasing. For those who turned 62 in 2020, full retirement age was 66 years and 8 months, and for those turning 62 in 2021, FRA is 66 years and 10 months. Anyone born in 1960 or later will have a FRA of at least 67.
As described earlier, Social Security’s financial solvency is not in peril, per se, but it does face some serious challenges under current law. Future law changes could seek to push FRA even higher, like 70 or 72, to improve the program’s ability to pay benefits.
One major issue with raising the FRA is that life expectancy is not increasing in the way it once was in this country. Issues like obesity, drug and alcohol addiction, and the ongoing pandemic have contributed to a marginal decline in life expectancy, and many of our other issues, like climate change and government mistrust, persist.
Social Security will stay around
There are most definitely a number of challenges and policy debates surrounding Social Security and its ongoing ability to provide for retired seniors. Given that we at least know what the apparent issues are, we can use that information to save a little more, build diversified portfolios, and reset our expectations for the long-term future of the program.