The retirement age has been steadily increasing since 1935, when Congress set it at 65. Currently, it stands at 67 and is projected to continue rising as the Baby Boomer generation reaches retirement. What does this mean for individuals planning to retire and collect Social Security benefits soon? Here’s what you need to know about the rising age for retirement and its relevance to government contracts and accounting.
First and foremost, it’s important to note that the age set by Congress does not determine when you should stop working; rather, it signifies the age at which you become eligible to collect Social Security benefits and the amount you can receive. While you can start collecting a reduced amount of your benefits as early as 62, you will only receive your full benefits when you reach 67. Being aware of these age-related milestones allows you to better prepare for your retirement.
As people are living longer, it is becoming necessary to raise the normal retirement age. This adjustment is crucial to maintaining the financial stability of Social Security. The program was not originally designed to support individuals for as long as it currently must. However, increasing the normal retirement age carries significant consequences.
Consider the impact on different segments of the workforce. While office workers may be able to continue working until 67, the same might not be feasible for blue-collar workers. The labor market may struggle to accommodate an aging workforce, especially considering projections that Social Security could be depleted by 2034 to 2038. Ideally, proactive measures would be taken to restructure the program well before that point.
In this scenario, the responsibility of retirement planning falls squarely on individuals and their savings. If you are planning to retire early or have no choice but to do so, your personal savings may become your sole source of income until your Social Security benefits kick in.
As the saying goes, there are only two sure things in life: death and taxes. It’s important to remember that retirement Social Security benefits can be taxed. Making informed decisions ahead of time not only involves saving for your retirement but also strategizing to minimize your tax liabilities and maximize your overall income.
At Peter Witts CPA PC, we understand the burden that comes with such planning. Our team of professional tax planners can assist you in developing effective tax strategies and long-term financial plans. Give us a call today, and let us help you protect your income for retirement and provide you with security throughout your retirement journey.