A lot of people, including myself, talk about working later into your retirement years just so we can maintain a certain lifestyle we are accustomed to living. The bad part is, no part time job is really going to allow you to afford all that travel and golf you were planning on doing once you stopped working. Us NEws has a good piece on the pitfalls of raising the retirement age.
Here’s the preservationist logic against raising the retirement age:
1. Social Security benefits are pegged so that a person reaching what the agency calls its “full retirement age” (FRA) is entitled to his or her full benefit. People retiring at the earliest age, which is now 62, gets about 75 percent as much money each month from Social Security as if they waited until their FRA–66 for those now approaching retirement. It’s also possible to defer taking Social Security until age 70, when the monthly benefit would be about 132 percent of what it is at age 66. This benefit structure was designed to be dollar-neutral to Social Security. Looking at longevity data and past decisions of beneficiaries, the agency figured that it will pay out the same amount of money regardless of when people elect to begin receiving benefits.
Raising the retirement age from 66 to 70 means that the time gap between early retirement at 62 and full retirement has been increased from four to eight years. This assumes it would still be possible to take early retirement at age 62. If the agency keeps its benefit structure in place, it no longer can afford to pay a person 75 percent of their FRA benefit if they elect to begin receiving the benefit at age 62. Instead, that “value neutral” payment at age 62 will fall to about 57 percent of the full benefit. In dollar terms, a 62-year-old early retiree due $1,000 a month at his or her FRA would receive $800 a month if the FRA was 65, $700 a month if it was 67, and $565 a month if it was 70. These calculations were made by Nancy J. Altman, co-director of Social Security Works.
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