Social Security Retirement Age Moving To 67 Or Even Higher

Americans are eagerly looking forward to their retirement age. But when asked what age they would like to stop working, there isn’t a consensus. But according to one survey, the average age people hope to retire is 62. That’s also the age at which individuals can first receive Social Security retirement benefits, provided that they are qualified based on their employment records. However, most of them receive reduced benefits for claiming early. 

If they wait until full retirement age entitlement, they receive the full benefits they have earned. Apart from that, if they extend until age 70, they can get an 8% benefit increase annually on their full retirement age benefits.

Meanwhile, the House of Representatives recently approved a retirement bill that would move the age for needed minimum distributions on certain savings accounts to 75, from the current generation of 72. If it gets approval from the Senate, that proposal would be gradually phased in by 2032. What do employee welfare advocates and experts say about moving the social security retirement age 67 or even higher?

How The Retirement Age Could Change

Retirement ages were last amended in 1983 under then-President Ronald Reagan’s administration. Those changes, which moved the full retirement age to 67 from 65, are still being implemented today. 

Many experts expect that any future modifications of the law could push up the Social Security retirement age. The Social Security 2100 Act: A Sacred Trust, authored by Rep. John Larson in 2021, would leave those thresholds unchanged and make benefits more generous. However, the legislation has a five-year timeframe.

On the other hand, the Social Security Administration has evaluated the economic effects that other proposals could have on the government’s retirement program.

“I expect that at some point in the future, Congress will agree on a Social Security package that includes some adjustment to the retirement age. And it’s very difficult to predict.” – Shai Akabas, Director of Economic Policy at the Bipartisan Policy Center.

Experts say the full retirement age could likely get pushed up by a year or two, which could gradually happen. 

Similarly, legislators could also increase the initial age for eligibility for retirement benefits from 62. And the highest age for delaying benefits and earning benefits increases from 70.

Akabas noted the changes could make it so the most vulnerable, particularly those forced to retire at the earliest possible age, don’t expect the same type of benefit reduction. 

How to Plan For Future Benefits

In 2000, the average age people retired was around 61 or 62. Twenty years later, it’s roughly 66, according to government data, Warshawsky said.

“Just in two decades, we’ve seen a substantial increase in the retirement age. People really are working longer.” – Mark J. Warshawsky, Senior Fellow at the American Enterprise Institute. 

Joe Elsasser of Covisum, a Social Security claiming software provider, said he perceives more people are retiring earlier than they had expected as their work prospects change. That reflects the importance of planning. It’s important to anticipate whatever your retirement years bring. But that can be confusing, given that Social Security could be inclined to change.

Elsasser added that if you’re 60 and above, there is less reason to worry any possible changes would affect your benefits.

Meanwhile, if you’re 45 to 60 years old, he said it’s practical to plan for benefit cuts of about 5%. A 10% to 15% reduction is doable for those who are even younger.

Employed individuals of all ages should also plan for the worst-case situation when the social security retirement age is reduced to 67 or higher. The factual significance of planning is making sure you have all your bases covered,” Elsasser.

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