1. Raise the retirement age
In response to an aging population and pressure on social security funding, the reform raised the full retirement age (FRA). For those born in 1960 or later, the full retirement age (currently 67) could be gradually raised to 68 or 69, with specific adjustments being phased in over the next few years. The impact: If you plan to start collecting Social Security at full retirement age, you may need to delay retirement for a few months or years to ensure you receive full benefits.
2. Enhance retirement benefits
The reforms also aim to boost benefits for low-income workers and provide more protection for lower-income retirees. For example, the reform increased the minimum security benefit, ensuring that those who have worked longer for lower wages receive higher social security payments.
The impact: If you are a low-income worker or have a manual job, you may benefit from this change and your Social Security benefits will get a boost, especially when you retire.
3. Increase contributions for high-income earners
Another important reform is to raise the maximum taxable income limit. For workers earning above a certain threshold, they would no longer pay Social Security taxes on only part of their income, but would be required to pay taxes on all of their income.
