Americans have been using the 66 full retirement age as the benchmark for when they expect to receive Social Security benefits for decades. That recently changed, though, officially moving the goalpost and making it necessary for individuals approaching retirement to change their plans.
The government has now officially declared that the full retirement age will be increased incrementally, affecting millions of retirement ages down the line.
What does the new retirement age mean to you?
The change to 66 full retirement age, however, is not merely numerical. It alters the age of full benefits without withholdings that others must work longer to receive, affecting others’ savings plans, investment payments, and even plans for medical care. Financial planners are already advising clients to factor the change into long-term planning. The change could affect savings strategies, investment payments, and even medical care planning.
The new age varies according to your birth year. Although those born before 1954 were able to retire at 66, anyone born in 1955 or later will experience an incremental increase. This is not so much a new development but has now officially been rolled out across the board.
If you were born in 1959, for example, your full retirement age is now 66 years and 10 months. And for people born in 1960 or later, the new full retirement age will be 67. This is an action by the government to react to benefits based on increasing life expectancy and mounting pressure on the Social Security system.
66 full retirement age changes affect workers and businesses
Companies that are forced to redirect their workforce strategy because employees postpone retirement need to keep track of a lengthening workforce, and this impacts hiring patterns and the work environment.
Meanwhile, workers who wish to retire at age 66 can now find that surprises await them. Should they wait another year? Is it worth sacrificing Social Security benefits to receive the highest payout? These are the types of questions people are asking in financial discussions.
Important things to keep in mind with the 66 full retirement age change
Retrieving your retirement calendar is more essential than ever. The following are some important factors to keep in mind:
- Lower Benefits: Taking Social Security before your new full retirement age can reduce your monthly benefit permanently.
- Delayed Retirement Credits: Waiting beyond your full retirement age (until age 70) could increase your benefits.
- Medical Costs: Delaying retirement could delay Medicare enrollment, depending on your work status.
- Income Planning: Having extra working years might enhance your retirement savings, giving you more flexibility down the line.
If you’re switching to the new 66 full retirement age, it is important to keep up and stay updated. An expert’s opinion and visiting the official websites will help you make the most informed choices for your life and budget.
Discover your benefits by your year of birth
To determine your specific retirement age and how your benefits would vary, formal sources need to be used. For instance, those born in 1959 will be 66 years and 10 months of age when they are full retirement age. Check out the Social Security information on Full Retirement Age for more details. This will inform you about how much you will receive based on when you retire and whether deductions are withheld.
The removal of the full retirement age of 66 as an automatic standard is a paradigm shift in how Americans will be planning the future. Because the economy constantly changes, this amendment will most definitely not be the first of many more amendments to planning retirement in America.
This is a reminder that planning for retirement shouldn’t be saved for later. Plan today, review your plan frequently, and keep an eye out for changes to the policy.
