Many Americans eagerly look forward to a time when they can stop working and officially set their status to “retired.”
But when asked what age they anticipate that could be, there isn’t a consensus.
The average age when people say they hope to retire is 62, according to one survey.
That is also the age at which people can first claim Social Security retirement benefits, so long as they are eligible based on their work records.
However, according to CNBC, people receive reduced benefits for claiming early. If they wait until full retirement age to claim — generally 66 or 67, depending on when they were born — they receive the full benefits which they have earned. If they wait until age 70, they stand to get an 8% per year benefit increase over their full retirement age.
Meanwhile, the House of Representatives last week approved a retirement bill that would push out the age for required minimum distributions on certain savings accounts to 75, up from the current age of 72. That change, if it passes the Senate, would be gradually phased in by 2032.
The proposal reflects a reality that many people today are generally healthier than generations past and therefore are living and working longer, said Mark J. Warshawsky, a senior fellow at the American Enterprise Institute and former deputy commissioner for retirement and disability policy at the Social Security Administration.
“It should cascade to other official ages throughout the tax code and the government’s programs, Social Security included,” Warshawsky said.
To be sure, no imminent changes to the Social Security program are in the works.
“It has and will continue to be the third rail of politics because of the public sensitivity around the issue,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center.
That does not mean there is no urgency around the issue, however.
The trust funds that the Social Security Administration relies on to pay benefits are projected to become depleted in 2034. At that time, 78% of promised benefits will be payable, the government agency said last year.
To shore up the program, lawmakers have a choice of increasing taxes on benefits, raising payroll taxes or increasing the retirement age. Any enacted changes could include a combination of all three.
Of note, Social Security advocates are staunchly against tweaking the Social Security retirement ages.
“An increase in the full retirement age is just a benefit cut,” said Joe Elsasser, founder and president of Covisum, a provider of Social Security claiming software.