Retiring at 67 will be the new Social Security retirement age. Experts believe that could rise even farther.
Many people in the United States eagerly await the day when they will be able to formally declare themselves “retired” and quit working.
However, no one can agree on an approximate age for this.
According to one survey, the average age at which respondents indicate they plan to retire is 62.
Those who have worked long enough to qualify for Social Security retirement benefits might begin receiving them at that age.
Early claimants, on the other hand, are penalized in the form of decreased payouts. A person can get all of their earned benefits by waiting until they reach full retirement age, which is usually around 66 or 67, depending on their birthdate. If they wait until the age of 70, they can expect an annual benefit increase of 8%.
There is another retirement bill in the works that would raise the age at which people must begin taking mandatory minimum distributions from certain savings accounts to 75. By 2032, if that modification is approved by the Senate, it will be gradually implemented across the country.
According to Mark J. Warshawsky, an American Enterprise Institute senior scholar and former deputy commissioner for retirement and disability policy at the Social Security Administration, many individuals today are generally healthier than generations past and hence are living and working longer.
According to Warshawsky, “it should be applied to other official ages throughout the tax system and government programs, including Social Security.”
The Social Security program will not be changing anytime soon, rest assured.
Shai Akabas, director of economic policy at the Bipartisan Policy Center, said, “It has been and will continue to be the third rail of politics because of the public sensitivity around the subject.”
However, this does not negate the importance of the problem.
In 2034, the Social Security Administration’s trust funds are expected to be spent, which means that benefits will no longer be paid. According to the government agency, 78 percent of the guaranteed payments will be paid out at that time.
Extending taxes on benefits, hiking payroll taxes, or increasing the retirement age are all options for bolstering the program. All three options might be included in any new legislation.
Notably, proponents of maintaining the current Social Security retirement age are adamantly opposed to any changes.
Full retirement age increases are merely a benefit reduction, says Joe Elsasser, the founder, and president of a company that provides software for Social Security claimants.
How the retirement age might alter in the future is the question.
The last time the retirement age was raised was in 1983 when Ronald Reagan was president.
Changes that raised the retirement age from 65 to 67 are still being implemented today.
As Elsasser pointed out, even going from 65 to 66 reduced benefits by 5 percent.
The retirement age for Social Security is expected to rise in the future, according to several analysts. Representative John Larson, D-Conn., sponsored the Social Security 2100 Act: A Sacred Trust last year. This would leave these thresholds constant and, in some cases, increase benefits. However, there is a five-year time limit in the Act.
In addition, the Social Security Administration has evaluated the financial impact of additional suggestions to alter the age requirements on the program.
A change to the retirement age is expected in the near future, according to Akabas, who predicts Congress will agree on a Social Security package at some point in the near future. “It’s impossible to say if that will happen in two years or 10 years.”
According to experts, the full retirement age may be gradually raised by one or two years.
Additional options include raising the age at which people can begin receiving retirement benefits from 62 and the maximum age at which they can defer receiving benefits and get benefit increases from 70.
In order to protect the most vulnerable, Akabas suggested that adjustments may be made so that individuals who are compelled to retire at the earliest possible age would not face the same benefit drop.
How to plan for the future and reap the rewards of your hard work now
In 2000, the average retirement age was somewhere between 61 and 62. Government data shows that it is now 66, according to Warshawsky.
According to Warshawsky “only in 20 years, we’ve witnessed a significant increase in the retirement age.” “People are working longer hours in real life than ever before.”
Elsasser has noticed a rise in the number of people taking early retirement as their job prospects have changed.
Planning for your retirement years now can help you deal with whatever comes your way. Given that Social Security is subject to change, this can be a challenge.
Elsasser added that if you’re 60 or older, you don’t have to worry about any potential changes affecting your benefits.