What Is The Benefit To Social Security By Changing Normal Retirement?
Social Security is a government mandated retirement plan. It was a part of President Franklin D. Roosevelt’s new deal legislation.
When was Social Security started?
President Roosevelt signed the Social Security Act on August 14, 1935. Taxes were first collected in January 1937. Benefits were first paid in 1939. Congress changed the name from Economic Security Act to Social Security Act during deliberations on the legislation. The original Social Security tax was 1% of wages up to $3,000.00.
When was the Normal Retirement age changed?
The 1983 amendments to the Social Security Act provided for a gradual increase in the normal retirement age to 67 by the year 2027. Normal retirement is the age at which a worker can start receiving Social Security benefits with no reductions for early retirement. Workers can start receiving Social Security benefits at age 62. For every month before normal retirement there is a 0.5 % reduction in payments. These reductions are permanent.
Why was the normal retirement age changed?
The normal retirement age was raised because of increases in the life expectancy rates for Americans. When Social Security was started in 1935 life expectancy was age 67 for men. Only the worker who paid the Social Security tax was paid benefits. Over the years congress has added benefits for spouses, survivors and disability. Since then life expectancy has increased dramatically. In a recent study, for married couples reaching age 65 at least one member was expected to live another 20 years. Needless to say adjustments have to be made to the normal retirement age to keep the Social Security trust funds from becoming insolvent trying to pay benefits for a longer period of time. The only alternative to raising the normal retirement age is to dramatically increase the Social Security tax on covered wages.
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