Fresh off the Press, Bipartisan Social Security Proposal
Written by: Rachael DeCosta CDFA®
A bipartisan group of Senators, including Sens. Bill Cassidy, R-La.; Chris Coons, D-Del.; Susan Collins, R-Maine; and Tim Kaine, D-Va, are proposing two changes to social security meant to encourage people to delay taking their social security at the early eligibility age, currently 62 years old.
In the proposal, the Senators note:
- 35% of Men and 40% of Women take social security benefits at 62 years old.
- Taking benefits at the early eligibility age, leads to approximately $111,000 loss in lifetime household income.
The proposed changes include the following adjustments to the Social Security Administration language:
- Age 62, currently “early eligibility age” becomes “minimum benefit age.”
- Ages 66 to 67, currently “full retirement age,” becomes “standard benefit age.”
- Age 70 would be “maximum benefit age.”
Additionally, the Senators are calling for more frequent mailings of statements. Statements would be sent:
- When an individual enters the work force or starts a new job.
- Once every five years when an individual turns 25.
- Once every two years from 55-60 years old.
- Annually from age 60.
While the proposal acknowledges that many beneficiaries taking social benefits at 62 years old, are doing so out of need, there is also a significant percentage that are still in the workforce or have other assets supporting their current quality of life. These individuals may not understand the impact on their monthly, potentially lifetime, benefit by taking social security at 62 years old vis-à-vis 70 years old. See following chart: reduced for life.
At first blush, this proposal may seem insignificant, however the change in language and increased communication could help promote an understanding of social security benefits and ultimately improve the financial wellness of individuals.
If you or someone you know have any questions about financial wellness, and when to consider taking social security benefits, please reach out to me at Rachael@sandboxfp.com, call me at 202-498-0852 or Contact Us and one of my colleagues or I will be sure to get back to you to schedule a free 30 minute consult.