Suze Orman: The Full Retirement Age Could Rise to 70

In the ever-evolving landscape of retirement planning, one name stands out as a beacon of financial wisdom: Suze Orman. Known for her straightforward and practical advice, Orman has once again captured the attention of Americans nearing retirement with her latest insights on Social Security. In a recent episode of her "Women & Money" podcast, Orman addressed the growing concerns about the future of Social Security, particularly the likelihood that the full retirement age (FRA) could increase to 70. This potential change, while not unprecedented, would have significant implications for future retirees.

Orman's prediction is based on historical precedent. In 1983, the FRA was raised from 65 to 67 for those born in 1960 or later. She believes that a similar increase to 70 is on the horizon, and this time, it would apply to future retirees rather than those already receiving benefits. This shift would mean that individuals would need to wait longer to receive their full Social Security benefits, potentially altering their retirement plans and financial strategies.

The potential increase in the FRA to 70 raises several questions and concerns for individuals nearing retirement. One of the primary economic implications is the potential stabilization of the Social Security system. Currently, only income up to $176,100 is subject to Social Security payroll taxes. Orman suggested removing this cap altogether, so high earners would continue contributing to Social Security on all of their income. This change could help address Social Security's long-term funding challenges by increasing the taxable income threshold or eliminating it. Orman stated, “They should just make that unlimited, that you all pay Social Security tax no matter how much money you make.” This would ensure that the system remains solvent for future generations.

However, raising the FRA could disproportionately affect different demographic groups. For low-income earners, delaying retirement benefits could mean a longer period of financial strain, as they may not have the savings or other income sources to support themselves during the extended working years. Orman advised listeners not to panic but recommended taking steps to stay prepared, such as keeping printed records of Social Security statements and understanding how the system works. She stressed, “Get familiar with the system. Knowing the ins and outs of claiming benefits, spousal benefits, and survivor benefits can help retirees make informed decisions.”

For those in poor health, delaying benefits might not be feasible or beneficial. Orman specifically mentioned that those in good health in their 60s should consider delaying benefits, as they are more likely to live longer-than-average lives. However, if someone is battling health issues or has reason to believe they may not live well into their 70s, it may not make sense to delay benefits. Each check will be larger once they eventually file, but if they only have a few years to enjoy that money, delaying might not be worth it. Orman acknowledged that the Social Security Administration has been cutting staff and closing offices, which could make it harder to get assistance. She recommended having a trusted family member or friend available to help navigate the system online if needed.

In summary, raising the FRA to 70 could help stabilize the Social Security system by increasing contributions from high earners. However, it could also create financial hardships for low-income earners and those in poor health, who may not be able to delay their benefits. It is crucial for individuals to understand the system and plan accordingly to maximize their benefits and protect themselves in retirement.

Orman's advice for future and current retirees is clear: stay informed and prepared. She recommends requesting and keeping printed records of Social Security statements, getting familiar with the system, and preparing for reduced access to in-person help. By taking these proactive steps, individuals can mitigate potential risks and ensure a more secure retirement.

In conclusion, Suze Orman's insights on the potential increase in the full retirement age to 70 serve as a wake-up call for Americans nearing retirement. While the change could help stabilize the Social Security system, it also presents challenges that require careful planning and preparation. By staying informed and taking proactive steps, individuals can navigate these changes and secure their financial future.