For many years, people in the U.S. could retire at age 65 and receive full Social Security benefits. However, a law passed in 1983 changed this for some beneficiaries.
This change was made to help stretch the funding of Social Security. Now, the full retirement age (FRA) has gone up, and people born in 1960 or later must wait until they are 67 to receive their full benefits.
If they continue working until age 70, they can receive increased benefits for those extra years.
Why Did the Retirement Age Change?
According to Maria Freese, a senior legislative representative at the National Committee to Preserve Social Security and Medicare, the increase in the retirement age was part of a major amendment passed by Congress in 1983.
At that time, Social Security was at risk of not having enough money to pay full benefits.
To address this, lawmakers made a bipartisan agreement that included raising taxes for the program and making some benefit cuts, one of which was increasing the retirement age.
The change was planned gradually to give people enough time to adjust. It was done in two steps: first, the retirement age went from 65 to 66 over about five years.
Then, after a break of almost 10 years, it started rising again until it reached 67, which is the current full retirement age. This change was meant to help keep Social Security financially stable.
How Does This Impact Retirees?
Many people plan to work as long as they are healthy and have jobs available. However, unexpected health issues often force them to retire earlier than planned.
This can create financial challenges, as they might need to start taking Social Security benefits sooner, reducing the amount they receive monthly.
Freese explained that this situation leaves many retirees with less money than they expected. As a result, they rely heavily on Social Security for their income.
This dependency makes it difficult for them to adjust to unexpected expenses or changes in their financial situation.
Financial Challenges for Retirees
A large number of retirees depend on Social Security benefits as their primary source of income. This dependence limits their financial flexibility.
Many are forced to make difficult choices to manage their expenses, such as cutting back on prescriptions or splitting pills to save money.
These sacrifices highlight the financial struggles faced by retirees who rely heavily on Social Security.
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Will the Retirement Age Increase Again?
Currently, the full retirement age is set at 67 for those born in 1960 or later. Any future increase in the retirement age would require new legislation from Congress.
Some lawmakers, particularly Republicans, have proposed raising the retirement age to 70 or tying it to life expectancy. If such changes were made, they would affect future retirees, making it necessary to work longer before receiving full benefits.
What Should You Do?
If you are nearing retirement age, it is important to understand how the changes to the FRA might impact your financial planning. Consider working longer if possible, as delaying retirement can increase your Social Security benefits.
Additionally, having other sources of income or savings can help reduce dependency on Social Security.
The changes to the full retirement age were made to ensure the long-term stability of Social Security. However, they also mean that future retirees must plan more carefully to secure their financial well-being.
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