The average retirement age in the United States is creeping upward, and for millions of workers, this could have a big impact on when and how much they’ll receive in Social Security benefits. So, what’s driving this trend, and what does it mean for your future?
Why Is Retirement Happening Later?
People are working longer for a variety of reasons. One big factor is that people are living longer, healthier lives. Another is financial necessity many Americans simply can’t afford to retire at 62 or even 65. At the same time, Social Security rules have changed, gradually raising the full retirement age (FRA).
Currently, the FRA is 66 years and 10 months for those born in 1959. For anyone born in 1960 or later, it’s 67. This means you’ll need to wait until at least that age to receive your full Social Security benefit. Claiming early, at age 62, for example, could reduce your monthly checks by as much as 30%. However, if you delay benefits past your FRA, you could see your monthly payments increase significantly up to 8% more for every year you wait until age 70.
How Does This Affect You?
For many, working longer can feel like a necessity rather than a choice. But understanding the pros and cons of when to claim Social Security is essential.
- Better Benefits for Waiting: If you can delay retirement and your Social Security claim, your monthly payments will be higher. This is especially helpful if you expect to live a long life.
- Challenges for Early Retirees: If you retire early, whether due to job strain or health issues, you’ll face reduced benefits for life. This hits low-income workers hardest since they may not have other savings to fall back on.
- Health Impacts Matter: Not everyone is physically able to work into their late 60s or 70s, especially those in physically demanding jobs.
What Could Change Next?
There’s been talk in Congress about raising the full retirement age even further, to 69 or even 70. Proponents say this will help stabilize Social Security’s finances, as the program is projected to face funding shortages by 2034. However, critics argue it unfairly reduces benefits for those who need them most, especially low-income and blue-collar workers.
What Should You Do Now?
If you’re nearing retirement, it’s crucial to plan.
- Understand Your FRA: Check your Social Security statement to see what your full retirement age is and how much you’ll receive at different ages.
- Plan for Delays if Possible: If your health and job allow it, working longer can mean bigger Social Security checks and more financial security.
- Factor in Other Savings: Social Security is just one piece of the puzzle. Make sure your retirement savings and other income sources are in good shape.
In a world where retirement is no longer a one-size-fits-all milestone, staying informed and making a plan tailored to your needs is the best way to secure a comfortable future.
