Is Your Financial Plan Ready if U.S. Raises Retirement Age?

Being ‘ready’ involves more than just waiting as long as possible to start collecting your Social Security benefits.

A mom and her young son cook together in the kitchen.
(Image credit: Getty Images)

This past April, the French government moved forward with raising the nation's official retirement age to 64 years old from 62. As expected, this news was met with loud, widespread criticism and protests in a country recognized worldwide for its sécurité sociale system that many want to emulate — and with a population that routinely rages against any type of pension reform.

Although the retirement age for most European countries is even higher (65-plus), it was still a tough pill to swallow for many French citizens, as President Emmanuel Macron wielded special constitutional powers to bypass Parliament and make the change.

Many are now wondering what would happen if the U.S., already with one of the world's highest retirement ages to collect full benefits (67 for everyone by 2027, still earlier for those born prior to 1960), eventually increases it. It’s well known the U.S. is facing a retirement crisis, with Baby Boomers and Millennials headed into their golden years facing potential cutbacks in Social Security benefits. Social Security trustees project the fund to run out by 2033 — and then pay only 77% of benefits currently projected, unless changes are made.

If the U.S. raises its official retirement age, will citizens take to the streets as they did in France? Perhaps. But one certainty is that anyone choosing to begin receiving Social Security retirement benefits at 62, the earliest possible age, will get much less than they initially thought. Currently, people born after 1960 will reduce their full benefit by 30% if collecting at age 62.

Now’s the time to consider how to maximize benefits, minimize dependency

While everyone’s situation is different, now is the right time to start thinking about ways you can maximize Social Security retirement benefits or minimize dependency on Social Security in case the full retirement age jumps or benefits are cut.

Many experts might say the best approach is to just wait it out — don’t start taking benefits until the age when you’re entitled to collect 100% of your benefits (currently that’s 67 years old for anyone born after 1960.) That’s certainly a good idea if you can literally afford to do so. But for those who can’t or don’t want to wait, there are other planning options.

Here are three tips for saving — for everyone from Boomers to Generation Alpha — before taking your Social Security benefits.

David Weinstock, CFP®, AEP®, CPA
Principal, Mazars Wealth Advisors LLC

David Weinstock provides business succession, estate, insurance, tax, and investment planning services to high-net-worth individuals and business owners. His more than 28 years of experience are centered on delivering wealth advisory services to individuals and families. He specializes in complex estate planning matters, often integrating the efficient use of life insurance solutions to meet clients’ objectives. David has published in The CPA Journal and in Estate Planning Magazine and has been interviewed by the Wall Street Journal.