Wednesday, January 18, 2012

Full SS Benefits at 65 No More

Photo by peasap
Many younger adults equate 65 with the age in which older adults move into retirement with full benefits. The concept of retirement is actually just a recent phenomenon. Most Americans living in the 1600s, 1700s, 1800s and for first half of the 1900s worked until their health failed them. The idea of retiring and enjoying a decade or more of leisure was a concept adopted in the mid-to-late 20th Century.

Today, older adults in the U.S. are not retiring at 65 at the high rates that they did in the 1980s and 1990s for economic, health and social reasons too complex to discuss fully in this blog post. Just to gesture quickly at some of the issues, the stereotype of retirement at 65 primarily applied to white men from the middle to upper classes. Women, minorities, members of the working class and especially those in the underclass did not have access to the pensions that allowed cushy retirement at 65. The reality is that many older adults then and now work beyond 65 and when they can no longer work, they experience fairly high rates of poverty.

Leaving behind these complexities for now, here are two policies that have increased the average age of retirement: 1) In 1986 Congress passed an amendment to the Age Discrimination Employment Act, making age-based mandatory retirements illegal. 2) Currently, Social Security is in the process of increasing the age for receiving full benefits from age 65 to age 67. Instead of changing the policy overnight, the limits are being raised slowly to allow beneficiaries some time to adjust.

Consequently, no one should expect that their parents or grandparents will stop working at age 65 and begin collecting Social Security benefits that will adequately cover the cost of housing, utilities, groceries, transportation and medical costs. Social Security benefits will NOT fully cover these basic expenses at today's cost of living. Aging requires a constant re-evaluation of one’s financial situation in response to changes in the economy, changes to the housing market, changes to the cost of medical care, and changes to government entitlement programs. For example, Congress is holding serious talks about raising Medicare benefits to age 67 to align with the increase in the age for receiving full benefits for Social Security. If this happens, many older adults will need to find work that includes health insurance or they may find themselves without any medical care until they age into the program.

As a former student of the humanities, I have long avoided any thought of finances, insurance policies, or government red tape. I strongly encourage adults of all ages to consider the interplay of these forces so that they can better manage their own retirement and better inform the older adults in their lives who may not keep up with current events but who--without an advocate--may experience significant changes to their finances with little time to prepare.

Do you know at what age your grandparents or parents will be eligible to collect Social Security benefits? Will they have any other income once they retire? Have you received an estimate of what your own monthly benefits will be from Social Security once you become eligible? Look for a subsequent blog post on penalties for collecting benefits at 62 and incentives for delaying benefits until age 70.

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Claiming Social Security Before 67 Costs Money


  1. Hmm, back to my original retirement option. More bacon.

  2. I hadn't heard about Congress considering aligning Medicare with Social Security in terms of benefits at particular ages, Karen--thank for the heads-up. I'll have to track down which committee that discussion is emerging from.

    1. See comment below. Basically, I try to promote just a sound bite worth of info per post, and this one mainly focuses on this idea: "65 will not mean you leave your job (forced retirement) nor will you receive full SS benefits at 65(age increase now in place). There are so many variables and so many exceptions, that it's hard to stay brief without overgeneralizing. I'm going to post more later on related topics in order to address some of these complexities. : )

  3. Russell: I actually have an assigned reading for my class on Policies and Programs on Aging (that I just downloaded this afternoon but have not read more than page 1 yet). The reading is from the Budget Office: "Raising the Ages of Eligibility" Congressional Budget Office, Issue Brief, January 2012. When I worked as a volunteer yesterday at the Medicare counseling office, the staff was talking about this there, too. I'm not exactly sure where this is in the committee structure in DC, but it's being bandied about. WashPo has a recent story on it, and NPR, etc. I quickly looked at Google News when composing this post, but I didn't choose to link to any of them, because they all had spin--some saying that it would save money, some that it would cost more (presumably by other gov't offices picking up the slack by the new gap that would be caused by raising the age.) In any case, it's something to watch. It's just coming into focus for me today.