The social retirement age reaches 67 years. Some say he could go higher – up news info

Many Americans are looking forward to the time when they can stop working and officially set their status to “retired.”

But on the question of how old they reckon it may be, there is no consensus.

The average age at which people say they hope to retire is 62, according to a study.

This is also the age at which people can first claim pension benefits from social security, provided they are eligible based on their work history.

But people get discounted benefits for applying early. If they wait until full retirement age to apply for it – usually 66 or 67, depending on their date of birth – they will receive the full benefits they have earned. If they wait until they turn 70, they will receive an 8% increase in benefits per year in addition to the full retirement age.

Here’s a look at other stories that offer an economic angle on life’s milestones.

Meanwhile, the House of Representatives last week approved a bill on retirement that would push the age for required minimum distributions on certain savings accounts back to 75 from the current 72. This change, if passed by the Senate, would be phased in over time. in 2032.

The proposal reflects a reality that many people today are generally healthier than previous generations and therefore live and work longer, said Mark J. Warshawsky, senior fellow at the American Enterprise Institute and former deputy commissioner. pension and disability policy social security. Administration.

“This should be transferred to other official eras in tax law and government programs, including social security,” Warshawsky said.

To be sure, no impending changes to the Social Security program are underway.

“This has been and will continue to be the third track in politics because of the public’s sensitivity to the issue,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

However, this does not mean that there is no urgency with the problem.

Trust funds on which the Social Security Administration relies to pay benefits are expected to expire in 2034. By then, 78% of the promised benefits will have been paid out, the public authority said last year.

To support the program, lawmakers have the choice of raising taxes on benefits, raising payroll taxes or raising the retirement age. Any amendments adopted may include a combination of all three.

It should be noted that advocates for social security are strongly opposed to changing the retirement age for social security.

“An increase in full retirement age is just a reduction in benefits,” said Joe Elsasser, founder and president of Covisum, a social security claims software provider.

How the retirement age could change

President Ronald Reagan signed the Social Security Amendment Act on April 20, 1983.

Corby | Getty Images

The retirement age was last changed in 1983 under President Ronald Reagan.

These changes, which raised the full retirement age from 65 to 67, are still in effect today.

Even the simple increase from 65 to 66 represented a 5% reduction in benefits, Elsasser noted.

Many experts expect that any future changes may push the retirement age for social security back. In particular, the Social Security Act 2100: A Sacred Trust, introduced by Rep. John Larson, D-Conn., Last year, leave these thresholds unchanged and in some ways make the benefits more generous. But the legislation has a five-year deadline.

In addition, the Social Security Administration noted the economic impact that other proposals to change age limits could have on the program.

In just 20 years, we have seen a marked increase in the retirement age.

Mark J. Warshawsky

senior researcher at the American Enterprise Institute

“I expect that at some point in the not too distant future, Congress will agree on a social security package that includes some form of retirement age adjustment,” Akabas said. “Whether it is in two years or in 10 years, it is very difficult to predict. »

Experts say it is possible that the full retirement age will be pushed back a year or two, which could be phased in gradually.

In addition, legislators could also raise the initial age for entitlement to pension benefits from 62, as well as the maximum age for delaying benefits and obtaining benefit increases from 70.

Adjustments could ensure that the most vulnerable – those forced to retire as soon as possible – do not see the same kind of benefit cuts, Akabas noted.

How to plan for future benefits

Geber86 | vetta | Getty Images

In 2000, the average age at which people retired was around 61 or 62 years. Two decades later, he is about 66, according to government data, Warshawsky said.

“In just 20 years, we have seen a significant increase in the retirement age,” Warshawsky said. “People are working really, really longer.”

Anecdotally, Elsasser said he sees more people retiring earlier than they expected as their job prospects change.

This underscores the importance of planning ahead so that you anticipate everything your retirement years have in store for you. Admittedly, this can be difficult, as social security can be subject to change.

If you are 60 or older, there is less reason to worry that potential changes will affect your benefits, Elsasser said.

But if you are between 45 and 60, it is reasonable to expect performance reductions of around 5%, he said. For those who are even younger, a reduction of 10% to 15% is possible.

In addition, people of all ages should also plan for the worst cases where the program reaches a point where it can only pay part of the benefits, which can result in a benefit reduction of up to 24% for pensioners.

“The real importance of planning is just to make sure all your bases are covered,” Elsasser said.

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