August 9, 2022

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Social Security retirement age reaches 67. Some say it may go up

Social Security retirement age reaches 67. Some say it may go up

Many Americans are eagerly looking forward to a time when they can stop working and officially determine their status as “retired.”

But when asked what age they expect it to be, there is no consensus.

The average age when people say they hope to retire is 62, according to single scan.

This is also the age at which people can first claim Social Security retirement benefits, as long as they qualify based on their work records.

However, people get discount benefits for claiming early. If they wait until the claimant’s full retirement age — generally 66 or 67, depending on their date of birth — they receive their full benefits. If they wait until age 70, they are likely to receive an 8% increase in benefits per year over their full retirement age.

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

The proposal reflects the fact that many people today are generally healthier than generations past, and therefore live and work longer, said Mark J. Administration.

“It should chain to other official ages throughout tax code and government programs, including Social Security,” Warchowski said.

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

“It has been and will continue to be the third rail of politics because of the public’s sensitivity on this issue,” said Shai Akabas, director of economic policy at the Center for Bipartisan Politics.

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But this does not mean that there is no urgency on the issue.

The trust funds that the Social Security Administration relies on to pay benefits are expected to deplete by 2034. At that time, 78% of promised benefits will be paid, the government agency said last year.

To support the program, lawmakers have the option of increasing benefits taxes, increasing payroll taxes, or increasing the retirement age. Any enacted changes can include a combination of all three.

It is worth noting that Social Security advocates are strongly against adjusting the retirement age for Social Security.

“Increasing the full retirement age is just a reduction in benefits,” said Joe Elsasser, founder and president of Covisum, a software provider that claims Social Security.

How can the retirement age change?

President Ronald Reagan signs the Social Security Amendment into law on April 20, 1983.

Corbis | Getty Images

In just 20 years, we’ve seen a significant increase in the retirement age.

Mark J Warsawski

Senior fellow at the American Enterprise Institute

“My expectation is that at some point in the not too distant future, Congress will approve a Social Security package that includes some sort of retirement age adjustment,” Akabas said. “Whether it will be in two years or 10 years, it is very difficult to guess.”

Experts say it is possible to raise the full retirement age by a year or two, which could be done gradually.

In addition, legislators can also raise the initial age of eligibility for retirement benefits from 62, as well as the highest age for delaying benefits and earning increases from 70.

Akabas noted that the adjustments could make it more vulnerable — those who are forced to retire at the earliest possible age — not see the same kind of benefit cut.

How do you plan for future benefits?

Geber86 | Vita | Getty Images

In 2000, the median age of retirees was approximately 61 or 62 years. Two decades later, the average retirement age was about 66, according to government data, Warshawski said.

“In just 20 years, we’ve seen a significant increase in the retirement age,” Warchowski said. “People really, really work longer.”

By anecdotal, Elsasser said he’s seeing more people retiring earlier than they expected as their job prospects change.

This highlights the importance of advance planning, so you anticipate whatever your retirement years. Admittedly, this can be tricky, since Social Security may be subject to change.

If you’re 60 and older, there’s no reason to worry that any potential changes will affect your benefits, Elsasser says.

But if you’re between 45 and 60 years old, it’s reasonable to plan for a reduction in benefits of about 5%, he said. For those younger, a 10% to 15% reduction can be made.

Moreover, people of all ages should also plan for worst-case scenarios where the program reaches a point where it can only pay a portion of benefits, which could cut benefits by 24% for retirees.

“The real importance of planning is just making sure you cover all of your bases,” Al-Saser said.