Why the Full Retirement Age is Now 67 – And What You Need to Know to Plan Ahead

The Social Security Administration (SSA) has made a significant change that could affect millions of future retirees. For years, many people have planned their retirement around the age of 66 years and 8 months, but that will no longer be the case for those born after 1959. Starting with people born in 1960 or later, the full retirement age will be 67 years. This change could leave some people wondering what it means for them and how it affects their retirement plans.

What’s Changing with the Retirement Age?

The retirement age for full Social Security benefits used to be set at 66 years and 8 months for people born between 1955 and 1959. But with longer life expectancies and people working for longer periods, the government is gradually increasing the age for future generations.

Now, those born in 1960 or after will have to wait until age 67 to collect full Social Security benefits. So, if you’re planning to retire at 66 and are born after 1959, you’ll need to adjust your plans.

Why is This Change Happening?

This change is all about keeping the Social Security program financially stable. When Social Security was first created in 1935, people didn’t live as long, and the program wasn’t designed for people to collect benefits for decades. But now, people are living much longer, so the government has to make adjustments to ensure that Social Security can keep up with these changes.

By raising the retirement age, the government hopes to keep the system running smoothly for years to come while also considering the fact that people are living longer, healthier lives.

How Does This Affect You?

If you’re in your 50s or older, this change won’t affect your retirement age. Those born before 1960 will still retire at 66 years and 8 months, as planned. But if you were born in 1960 or later, you’ll need to wait until you’re 67 to start receiving full Social Security benefits.

It’s worth noting that you can still start receiving benefits as early as age 62, but your monthly benefit will be reduced if you do. On the other hand, if you choose to wait until after your full retirement age, your benefit will increase. You can earn a higher monthly benefit by delaying it, up to age 70.

What Should You Do About This Change?

If you’re planning for retirement, this shift in the retirement age means it’s time to rethink your strategy. For younger people, this change means you may need to work a bit longer before you can fully retire and rely on Social Security. It’s essential to keep this in mind and adjust your savings plan accordingly.

Experts recommend making sure you’re putting enough money aside for retirement. In addition to Social Security, consider other retirement options like a 401(k) or an IRA. Also, don’t forget about healthcare—Medicare benefits start at age 65, but if you’re planning to work until you’re 67, you’ll need to factor in healthcare costs before Medicare kicks in.

Final Thoughts

While the shift to a full retirement age of 67 won’t affect current retirees, it’s a big change for those of us who are younger. Understanding how this will impact your Social Security benefits and planning for a longer work life is important. By staying informed and adjusting your financial plans, you can set yourself up for a more secure retirement.