3 Social Security Rules That Aren’t Changing Now-but Could in the Future

Social Security has been around for decades. But that doesn’t mean the program doesn’t undergo changes. In fact, certain aspects of the program tend to change every year, like the maximum monthly benefit and the earnings-test limit.

Social Security is also facing some financial challenges that could result in benefit cuts down the line. The problem is that as baby boomers exit the workforce in droves, there won’t be enough younger workers to come in and replace them, thereby paying into Social Security. And so as that mass exodus happens and boomers start filing benefit claims, Social Security will have to dip into its trust funds to make up for a big revenue shortfall.

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Those trust funds won’t last forever, though, and recent projections have them running out of money by 2035. As such, lawmakers are working through different solutions to prevent benefit cuts from coming down the pike.

Now all of the following changes are hypothetical in that they’re not set in stone. And to be clear, they’re also not happening in the next couple of years. But at some point, Social Security might undergo several changes that could impact seniors and workers alike.

1. A later full retirement age

Right now, full retirement age (FRA), which is when seniors can collect their monthly benefits in full based on their respective wage histories, sits at 67 for anyone born in 1960 or later. Lawmakers have proposed pushing back FRA to 68 or 69 to give Social Security more financial breathing room.

The logic behind this proposal is that Americans are living longer than they were in years past, so asking people to put in an extra year or two in the workforce isn’t unreasonable (though retirement doesn’t always go hand in hand with claiming Social Security, it often does). And while workers may not be thrilled with the idea of having to wait longer to collect their benefits in full, it’s easy to see why pushing FRA back a couple of years might help Social Security tremendously.

2. No more wage cap

Social Security’s main source of revenue is the money it gets from payroll taxes. But workers don’t pay those taxes on all of their income. Each year, a wage cap determines how much earnings are subject to Social Security taxes.

This year, the wage cap sits at $147,000, so earnings beyond that point aren’t taxed for Social Security purposes. But some lawmakers have proposed eliminating the wage cap and having workers pay Social Security taxes on all of their income as a means of generating more revenue for the program.

3. Means testing for benefits

Right now, anyone who pays into Social Security can collect benefits beginning at age 62. That means that seniors with hundreds of millions of dollars in assets can receive Social Security on a monthly basis.

Some lawmakers have suggested means testing seniors for Social Security eligibility — meaning, reduce or even eliminate benefits for wealthy seniors who don’t need the money. Clearly, there’s likely to be lots of backlash if this proposal gains a lot of traction. But it’s a solution that’s been discussed many times before in the context of helping Social Security cope with its financial challenges.

Be prepared

None of these changes are official as of today, and even if that happens, we’re not going to see a new FRA, an eliminated wage cap, or a system of means testing get implemented within the next year or two. But it’s important to prepare for the fact that at least some of these changes might hit in the future.

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