What Will Full Retirement Age Be When Younger Generations Retire?
Written by
Sarah Sharkey
Edited by
Amen Oyiboke
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Many Americans consider the milestone of 65 years old to be ‘retirement age.’ While 65 years might represent retirement in the minds of many, that’s not the age when most are retiring now. And it’s also likely not the age younger generations should expect to retire in the future.
Explore how the full retirement age is likely to change for younger generations and how that might impact future retirement plans for them.
What Is Full Retirement Age?
Full Retirement Age (FRA) represents the age at which workers can claim full Social Security benefits. Currently, full retirement age ranges from 66 to 67. For example, the FRA for those born in 1955 is 66 and 2 months. But those born in 1960 or later have an FRA of 67, according to the Social Security Administration.
While you can take Social Security benefits before your FRA, as early as age 62, taking Social Security early will lead to a reduced monthly check. Even if someone born in 1960 took their benefits at 65, long deemed the standard retirement age, they’d see a reduction in their monthly check.
Why Will It Likely Increase?
The FRA associated with Social Security benefits has risen over time. In fact, the FRA has been steadily increasing since 1983. While the top-end age is currently 67 for FRA, this will likely grow over time, if the past is any roadmap for the future.
It’s difficult to know exactly how much the full retirement age will increase for millennials and Gen Z, if at all. But it seems entirely likely that the FRA will climb to at least 70 by the time the younger generations are tapping into their Social Security benefits.
When Do People Retire?
Although 65 has long been hailed as the appropriate age to retire, that’s not when most people actually walk away from work.
According to a recent survey from MassMutual, the actual average retirement age for Americans is 62. Additionally, pre-retirees and current retirees consider 63 to be the ideal age to retire, according to the same survey. Neither of these represents the full retirement age necessary to take full Social Security benefits. But at age 62, retirees can tap into a reduced Social Security check.
Many retirees report leaving the working world behind earlier than planned for various reasons, including changes at work, the ability to afford retirement earlier, illness, and burnout. Only 10% of retirees surveyed retired later than they planned.
How Younger Generations Can Plan for Retirement
While a potentially higher FRA might seem like a downer, the reality is that an older FRA isn’t set in stone yet. Plus, for most millennials and Gen Zers, retirement is still decades into the future. That extended timeline offers the best opportunity for younger generations seeking to secure a stable retirement in the somewhat distant future.
If you are ready to start planning for retirement now, start by laying out your financial goals. Getting clear on your priorities, which likely include retirement, can help you build a budget that suits your values. If you have high-interest debt, making paying it off and staying out of debt a top goal.
Then, make space in your budget for retirement savings and tuck these funds into a long-term investment strategy. For example, you might opt to invest in low-cost index funds over the long term, which can help you grow wealth over time. That nest egg could serve as your retirement fund later in life.
When retirement gets closer, hopefully you’ll have a robust nest egg that gives you options. Even if the FRA has risen, your nest egg could give you the financial bandwidth to retire earlier than your designated Social Security retirement age.
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