The age for full Social Security benefits has increased to 67 for people born in 1960 or later. This change was part of a law passed by Congress in 1983 to help stretch out Social Security funds. Maria Freese, a senior legislative representative at the National Committee to Preserve Social Security and Medicare, explains the reasons behind the increase.
“At that time, there was a significant concern over the availability of funds to pay full benefits,” she says. As a result, a bipartisan compromise led to legislation that increased taxes contributing to the program and included some benefit cuts. Raising the retirement age was one of those cuts.”
The change was implemented gradually to give people time to plan.
It was done in two steps. First, the age increased from 65 to 66 over about five years. Later, it started increasing again until it reached 67.
Many people plan to work as long as they can, depending on their health and job availability. However, health issues often force them to retire earlier than planned. This can lead to less money for retirement than expected, making them heavily dependent on Social Security benefits.
Full retirement age adjustment explained
Freese says it’s unlikely the full retirement age will increase further unless Congress passes new laws. There have been proposals, particularly from Republicans, to raise the retirement age to 70 or to tie it to life expectancy, but nothing has been passed yet.
This shift impacts a significant number of people who rely on Social Security benefits for most of their income. It requires considerable adjustments in their retirement planning and lifestyle. While individuals can start receiving reduced benefits at age 62, waiting until full retirement age yields a larger monthly payment.
Further delaying benefits beyond the full retirement age can increase benefits by 8% annually until age 70. The year and month you reach full retirement age depend on the year you were born. For example, if you were born between 1943-1954, your full retirement age is 66 years.
If you were born in 1960 or later, it’s 67 years. Despite the financial incentives to delay, most people still begin receiving their benefits early. The median retirement age is 62, and the median age for starting Social Security is 64.
Surveys consistently report that a large percentage of retirees leave the workforce earlier than planned, often due to hardships such as health problems or disability, changes at their company, or simply because they feel they can afford to retire. Understanding the changes and nuances of Social Security is crucial for future retirees to make informed decisions about when to claim their benefits.
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