Final answer:
A worker's full Social Security retirement benefits are not reduced by employment earnings once they reach full retirement age. Benefits are based on lifetime earnings, important for a significant number of retirees, and demographic shifts like the retirement of the baby boom generation may impact the program's sustainability.
Step-by-step explanation:
If a worker has employment earnings after starting full Social Security retirement benefits, the correct answer is that the worker's Social Security benefits will not be affected. Social Security is designed to provide a form of pension to workers after reaching retirement age, which has shifted from sixty-five to sixty-seven for workers born after 1959. The amount a worker receives from Social Security is based on their lifetime earnings, and once full retirement age is reached, benefits usually do not decrease due to additional earnings. However, it's important to note that for individuals who are younger than full retirement age for the entire year, there is a limit to how much they can earn before it does affect their benefits. If earnings exceed the limit, Social Security benefits may be reduced.
Millions of retired Americans rely on Social Security benefits. Nearly 46 million retired workers receive benefits, and for many, it's a crucial source of income especially as they get older and their living expenses, such as healthcare costs, increase whereas their savings diminish. The program functions as retirement insurance, with workers contributing a portion of their income to fund the benefits that they will receive in later life.
The demographic changes, notably the retirement of the baby boom generation, will increase the dependency ratio and could strain Social Security, as a larger proportion of the population retires and fewer workers are available to contribute through payroll taxes. This shift could have significant impacts on the Social Security program and the standard of living for the average American, due to the increased number of retirees receiving benefits compared to the working-age population supporting the system.