Social Security Replacing Smaller Portions of Workers IncomeThe reduced replacement rate results from Congressional action in 1983, which raised the normal retirement age in gradual steps, from 65 to 67, for workers born between 1938 and 1960. When the change is fully effective, for all workers born in 1960 or later, the average benefit at age 65 will be reduced by about 13%.
Moreover, even that low 36% replacement rate does not take into account other costs that will further reduce seniors net benefits. When Medicare Supplementary Medical Insurance (SMI) is factored in, the Social Security income replacement rate will fall to about 31% in 2030.
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