It’s one of the hardest things for workers to decide when to stop working and start getting Social Security. Life throws curve balls at people when they least expect them, so there are no good answers to the question of when. However, the answer seems to be “potentially never” more and more.
Let us go back to 1935, which is when the retirement age was set. During the Great Depression, the Social Security Act set the standard retirement age at 65 years old across the country. At that point, men could only expect to live to 58 years old and women to 62 years old, so it was clear that most people would not retire.
“A lot of people were against a national retirement plan,” says labor economist Teresa Ghilarducci. Setting the age at 65, back when people didn’t live as long as they do now, was a political move to get the Social Security law passed.
Now, though, almost everyone makes it to 65, and the system wasn’t made for that. These days, people can get benefits for decades. In 1983, this is what caused the first collapse of the Social Security system.
To stop this from happening again, the full retirement age was slowly raised to 67. The problem is that beneficiaries can still start getting money as early as age 62, Medicare doesn’t start until age 65, and Americans have grown used to the earlier retirement age.
All of this means that in less than ten years, all Social Security benefits will be cut by 23%. This is because Social Security is about to run out of money again.
Solutions to the Social Security shortfall
One of the main ideas is to raise the retirement age again, which is something that people on the political right support. Because people are living longer, they think it should be pushed back. Some business leaders, like Blackrock CEO Larry Fink, support them.
Fink said, “No one should have to work longer than they want to,” but he also called the idea of retiring at age 60 “a bit crazy.”
The idea is that if we live longer, we shouldn’t use those extra years to relax or get sick and weak. Instead, we should keep working in any way we can.
Many studies seem to support their policies. For example, the Pew Research Center found in a December study that the number of Americans aged 65 and up who are working nearly doubled from 1987 to 2023, and these older workers were happier with their jobs than younger workers.
“The new retirement is no retirement: Baby boomers are keeping jobs well into their sixties and seventies because they “like going to work”” is a catchy headline that helps the cause.
Ghilarducci goes on, “A lot of research has shown that older people who are still working are healthier than older people who are retired.” And polls of people who chose to keep working show that most of them did so because they liked their job.
But while this picture looks good, the truth is not like that at all. Most people who work past retirement age do so because they can’t afford to. This is especially true for people who work in blue collar jobs.
Ghilarducci says, “This wrong idea that working longer makes older adults healthier is not true for 90% of the population or important.” For almost everyone, like a secretary, a health care worker, or a store clerk, research shows that retiring with enough money is better for their health.
It can be hard for many older people to put off retirement, especially if they need to keep working to pay their bills. MassMutual did a survey and found that almost half of retirees quit their jobs before they planned to. About one-third of them had to retire because of changes at work.
Also, a quarter said they retired early because they were sick or hurt. Caregiving duties, like taking care of a spouse with dementia or other health problems, are another big reason why people retire without planning to. These things show how hard it is for older people to balance their health, work, and caregiving responsibilities.
So, the question of when to retire is still complicated and depends a lot on each person’s situation. It may be best to put off retirement if you can, but right now you should focus on getting ahead financially and taking care of your health.
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