Written By: Anushka
Politicians are considering raising the Social Security retirement age to address a potential resource shortage by 2035, which may lead to benefit cuts.
Increasing the retirement age affects Social Security benefits, potentially reducing the total amount retirees receive if they claim benefits earlier.
To qualify for retirement benefits, individuals must work at least 35 years and pay Social Security taxes, which fund current retirees.
Social Security taxes are not a savings program but a method to provide funds to current retirees, based on wages indexed to inflation.
The SSA calculates benefits by averaging 35 years of earnings, adjusted for inflation, to determine the primary insurance amount (PIA).
Full retirement age (FRA) varies by birth year. For those born in 1960 or later, it's 67. Retiring before FRA reduces benefits; delaying increases them.
Retiring early (before FRA) reduces benefits by 5/9 of 1% per month for the first 36 months and 5/12 of 1% per month thereafter.