Having a plan for retirement has always been important. It is likely one of the most important choices someone will ever have to make at work. It is not enough to just dream of the day when we do not have to work anymore; we also need to plan for the years we have left when we do not have any economic support from the government.
But over time, the rules have changed. It is more important than ever to know how changes in the retirement age can affect our plans for the future. For people born in the 1950s or 1960s, the changes to Social Security will have a direct effect on them. Do not worry, though. We will help you choose the best things for your future.
How will the retirement age change in 2025?
If you want to change the retirement age, 2025 is the year to do it. A law that has been in place since the 1980s has slowly raised the retirement age. In other words, these changes will completely alter the job market. In 1983, Congress passed a reform that raised the retirement age from 65 to 67. However, they decided that the change would happen gradually so that it would not be too sudden.
The main reason for this change is that people are living longer now, and the pension program needs to be redesigned so that it can continue. Because of these new rules, people born in 1959 will reach retirement age in 2025. That is the main change.
What does “full retirement age” mean?
Once you have worked for the government for the required number of years, you can start getting all of your Social Security benefits at full retirement age. If you decide to wait, your monthly benefits will go up, but if you retire early, they will go down. The full retirement age will rise to 67 years for people born after 1960 and 66.8 months for people born before 1960.
Can I retire early?
Yes, you can choose. This is the youngest age you can retire: 62. However, your benefits will be permanently cut, and you could lose up to 30% per month. But if you want to, you can wait until you are 70 years old, but your monthly payments will be 8% more. You should think about your health, your savings, your future plans, and your desire to keep working before making this choice.
How do I plan for retirement then?
Remember that things get worse with age, so when you plan for your retirement, please save some money for medical bills! You should talk to a financial advisor who can help you make a plan that fits your needs.
What is better?
There is no best plan, whether you wait or move it up. To make this choice, you need to know what you can afford and how much you spend each month. It might not be worth it to wait for a little extra cash or to keep working for a little less as well. We can not help you with that choice because it is so personal.
And what about young people?
Young people, we have a very clear message: save money as soon as you can. Also, since the age to retire is going up, who does not tell us that there will not be any pension money left when we get old? So, start saving right away so you do not have to rely on Social Security alone when you retire.
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