What Will Happen If 70 Becomes the New Retirement Age in the US?
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Whether the full retirement age (FRA) in the U.S. should be pushed back to 70 years old has been a hot topic among politicians. Republican House leaders released a proposed budget that suggests 70 should be the new retirement age, while others strongly disagree. As for most U.S. citizens, well, retiring at 70 isn’t exactly their dream scenario, and many are banking on retiring even earlier than the current FRA.
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What are the chances that retiring at 70 will become the new norm per the government and what would this mean for working Americans?
Could 70 Become the New Retirement Age? If So, When Would It Take Effect?
It’s not a guarantee, but it is a strong possibility that 70 could become the new FRA in the U.S.
“It’s quite conceivable that 70 could become the new standard retirement age in the U.S.,” said Brandy Burch, CEO at Benefitbay. “[This is] primarily due to evolving economic conditions, longer life expectancies and the financial sustainability of Social Security. People are living healthier, longer lives, which means more years in the workforce can help improve the adequacy of retirement savings and address potential shortfalls in public pension schemes.”
But predicting when the new FRA may go into effect could be tricky because of the complications that would accompany the major change.
“Predicting an exact timeline is challenging because such a change would involve complex legislative processes and societal adjustments,” Burch said. “However, given the ongoing discussions about the sustainability of Social Security and the demographic trends pointing towards an aging population, I would anticipate a gradual shift in this direction over the next couple of decades.”
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If This Happens, Life Will Drastically Change for Future Retirees
Retiring later could be challenging for many. As John Stevenson, CFF and expert contributor at Annuity.org, points out, hardships could sprout due to a few factors. There’s the issue of health concerns affecting a person’s ability to work. “As people age, they may encounter more health issues, potentially making it difficult to work until 70,” Stevenson said.
Then, there’s the element of age discrimination that may be present in the workplace. “Older workers might face challenges in securing employment due to age-related biases in the workforce,” Stevenson said. And, lastly, there is a very real possibility of financial strain on older retirees. “Many individuals may struggle financially if they’re unable to work until 70, particularly if they haven’t adequately saved for retirement,” Stevenson said.
Start Saving Early
One way to prepare for a longer time in the workforce is to start aggressively saving early.
“Regardless of the retirement age, starting your savings journey as early as possible is crucial,” Burch said. “Take advantage of compound interest and retirement accounts like 401(k)s and IRAs.”
Invest in Your Health
Wanting to live a long life is one thing; wanting to live a long and healthy life is a bit more involved and requires more commitment to taking care of yourself.
“Invest time and resources in maintaining good health,” Burch said. “Preventative healthcare, regular exercise, and healthy eating can reduce medical expenses later [in] life and improve quality of [living] during the working years and beyond.”
Plan for Higher Healthcare Costs
Hopefully you will stay healthy throughout your extended working years, but don’t gamble on it.
“Anticipate higher healthcare costs as you age and consider health savings accounts (HSAs) or long-term care insurance as part of retirement planning,” Burch said.
Consider Lifestyle Changes
When you’re looking to save more, changing up your lifestyle (and bringing your means up a notch, if possible) is helpful.
“This could mean downsizing living arrangements or choosing more budget-friendly leisure activities,” Burch said.
Commit to Lifelong Learning
Staying in the workforce longer could entail learning new skills on a regular basis to stay relevant and desirable to employers. Commit to a life of learning.
“Keep skills updated and acquire new ones,” Burch said. “Continuous education can make transitions within careers smoother and enhance employability in later years.”
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This article originally appeared on GOBankingRates.com: What Will Happen If 70 Becomes the New Retirement Age in the US?
