U.S. Retirement Age Now 69: A major policy alteration is preparing the Americans to restructure their retirement plans in light of retirement policy changes. By the same token, the government has made it official that there is now a full retirement age of 69, a major change in the Social Security system which has had effects on millions of present and future retirees.
Why the Retirement Age Is Rising
Keeping the long-term viability of the Social Security Trust Fund at the forefront of their minds, the decision to raise the retirement age was taken. Americans are living longer and drawing benefits for longer periods, thereby causing funding shortfalls in the program. The Social Security Trust Fund thus, according to projections, may well stand depleted by the mid-2030s, unless some great reforms are made.
By increasing the full retirement age to 69, the government aims to lessen financial strain on the system while also promoting longer workforce participation.
The Practical Implication for You
Earlier, people who were born after 1960 in America would attain full Social Security benefits at age 67. Now, people born in 1970 or after have to wait until age 69 to claim full benefits. Hence, these are able to choose early retirement at age 62 too but now it comes with greater reductions in monthly payments.
Suppose for example, under the new rules, someone retires at age 62. Such a person may face a 35 to 40 percent reduction in benefits-while the older guidelines suggest a maximum reduction of 30 percent.
The Positive and Negative Aspects of the Change
Positives:
- Helps prolong Social Security solvency
- Urges people to remain working and paying more taxes until later years
- Offers higher monthly benefits for those who delay retirement until age 69
Negatives:
- Makes it more difficult for someone working in a physically taxing job to work longer
- Increases financial pressure on those who cannot bear to delay retirement
- May widener inequality to the lower-income groups who rely mostly on Social Security
Planning Ahead
Prior to the actual day of retirement, one has to contend with the new laws attached to reviewing financial plans. Try to contribute more money into your own savings, into retirement accounts such as a 401(k) or IRA, or consider investment with a financial advisor.