More Americans face the real prospect of having to work full-time or hold down multiple part-time jobs - much later in life than expected - if mooted plans to increase the retirement age are approved.
Following on the heels of plans by Denmark to raise the retirement age to 70 by 2040 – the highest in Europe – there are moves afoot by the United States Social Security Administration to make similar watershed changes to the country's official retirement age.
In response to America’s mounting debt crisis, the Republican Study Committee is looking to increase the full retirement age to 69 within eight years.
The plan would begin with an increase in retirement age in 2026 and slowly raise it to 69.
The potential change – which has Americans currently between 30 and 55 years in its sights – is projected to potentially impact 257 million Americans by 2033.
Based on the Congressional Budget Office's comprehensive estimates, Social Security recipients could – once inflation is taken into account - lose around US$420,000 in their lifetime benefits.
With the higher retirement age, Americans who rely on social assistance will receive roughly $3,500 less (a 13% cut) each year.
However, some individuals may lose significantly more than $3,500 annually, while others stand to lose less.
The retirement age was increased from 65 to 67 starting in 1983.
Given that they typically have shorter life spans, those in construction, healthcare, and service work are expected to be impacted on a greater scale if the retirement age increases to 69.
Due to being in more physically and mentally taxing fields, these Americans tend to depend more heavily on Social Security payments and are often unable to work into their late 60s due to physical demands.
In response to pending changes to the retirement age, financial planners in the U.S. are urging aging Americans to recalculate their retirement savings under the assumption their Social Security payments will be lower.
To allow for potential cuts caused by a raise in the retirement age, Americans are encouraged to consider increasing their 401k savings by roughly 2% to 3%.
Retirement experts also encourage workers to save money through Roth IRAs, Health Savings Accounts, and other investments to supplement their Social Security cheques.
