Prepare for 2017 Social Security Cuts

By BEA KARNES (Patch Staff)

More than 30 years ago, a bi-partisan effort between Republican President Ronald Reagan and the Democrat-led Congress produced changes in Social Security to ensure its solvency.

Those changes include increasing the retirement age from 65 to 67. It’s already at 66, with the next phase of incremental increases coming between 2017 and 2022. What is little noticed is what’s happening to benefits for people who choose early retirement at 62.

When the retirement age was 65, someone choosing to claim Social Security benefits at 62 suffered a 20 percent reduction in benefits. When the full retirement age reaches 67, the early retirement penalty will be a 30 percent reduction. The drop will be enough to push some recipients below the poverty level if they depend wholly upon Social Security.

A cornerstone of the 1983 agreement was the creation of a Social Security Trust Fund, to cover the retirement of Baby Boomers. The Trust Fund built-up over for more than two decades, but a monthly draw-down began in 2010. The Pew Research Center cites Congressional Budget Office statistics in predicting that Social Security will deplete its storehouse of Trust Funds and Treasury Bonds in 2033. After that, it’s expected that Social Security will bring in enough to cover 75 percent of promised benefits.

If things don’t change, you can plan accordingly. The wildcard is politics. Several presidential candidates are proposing further changes to Social Security.

But until Congress and some future president agree on how to revamp the system, the focus is on 2017—a further drop in benefits if you plan to take Social Security at 62.

--Image credit: Shutterstock

Also on Patch:

• Community Invited to Celebrate First Million Hours of Service of Livermore Centennial Light Bulb
• Eat Krispy Kreme and Support Pleasanton Education
• Remains Discovered in 2010 in Tri-City Area Are Those of Missing Swedish Woman
• Registration Open for Summer Tennis Camp