Proposed Social Security cuts come in many forms — some of which are disguised as no cuts at all but amount to the same thing. That’s the case with proposals to raise the full retirement age for collecting benefits, which has the backing of more than 170 members of Congress.
As previously reported by GOBankingRates, a group of Republican lawmakers aims to balance the federal budget and slash government spending by targeting programs like Social Security.
In June, the 176-member House Republican Study Committee (RSC) approved a fiscal blueprint that would gradually increase the full retirement age to 69 years old for seniors who turn 62 in 2033. The current full retirement age is 66 or 67, depending on your birth year. For all Americans born in 1960 or later, the FRA is 67.
Proponents of raising the full retirement age argue that it’s not technically a “cut” to Social Security benefits, but try telling that to those who are affected by it. When the FRA is delayed, it effectively reduces the number of years you can receive your full benefits, which means you will receive less money over the course of your retirement.
Other lawmakers have proposed more straightforward cuts to Social Security by slashing benefits across the board. These and other proposals aim to reform the program before the Old Age and Survivors Insurance (OASI) Trust Fund runs out of money, which could happen within the next decade. When it does, Social Security will be solely reliant on payroll taxes for funding — and those taxes only cover about 77% of current benefits.
Uncertainty over the future of Social Security funding makes it more important than ever for retirees to cut down on expenses they should no longer be paying. Here’s a look at five of them.
A Second Car
This might have been a necessity in previous years, when you and your spouse were juggling careers. But most retired couples can get by with a single car since you don’t have to drive to work anymore. Cutting out a car payment — along with the taxes, fees, fuel and maintenance that go along with it — can help bolster your finances in the event of Social Security cuts.
Dining Out
This should be one of the first items to go whenever you need to trim your budget. Dining out is essentially a luxury — even if you have grown tired of cooking. If the thought of prepping food and pulling out pans makes you cringe, you can still get prepared meals at your local supermarket that cost a lot less than restaurant meals.
Impulse Purchases
Impulse spending on big-ticket items like vacations and new electronics can take a big bite out your budget. Retirement is the time when you need to rein in these kinds of purchases — especially with lawmakers talking about Social Security cuts. Soon enough you’ll find that you can get by fine without these items.
Peak Travel Costs
When you were working you probably had to fit travel into weekends or around holidays — the most expensive times to hit the road. Now that you have a more flexible schedule, you can save a lot of money on hotels, air fare and car rentals by traveling on weekdays and during off-peak seasons. Flexibility also lets you take advantage of last-minute discount offers.
Kids’ Expenses
A recent survey of 1,000 parents with kids ages 18 to 42 found that more than half (55%) still help their adult children financially. Nearly 1 in 5 (19%) have sacrificed their retirement savings to give their children a hand. But when you are living on a fixed retirement income — under the threat of Social Security cuts — it might be time to cut the financial cord.
“Have a talk with your kids and get them to understand, ‘Mommy and Daddy are no longer your bank,’” financial guru Suze Orman said in an interview with Moneywise.