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70: Social Security’s Real Retirement Age

According to analysis and research by Alicia Munnell of Boston College’s Center for Retirement Research, changes in Social Security have made the effective retirement age 70. Given longer lifespans, that age may be appropriate. But the changes may hurt workers who are forced to retire and take their benefits early, significantly reducing their lifetime benefits.

When Social Security took effect in 1940, 65 was pegged as the full retirement age. At the time, the average life expectancy was 77.7 for men and 79.7 for women. By 2015, those averages are projected to rise to 84.3 for men and 86.6 for women. In 1956, women were allowed to start taking benefits at age 62 because many were younger than their retiring husbands; that benefit was extended to men after a recession. And in 1972, an increased benefit of 1% annually was granted to those who waited — an incentive that was raised to 3% in 1983 and to 8% in 2008 to more fairly compensate those who waited.

The results are dramatic for those who delay taking benefits: For every $1,000 received by waiting until age 70, the equivalent is $568 for those who begin at age 62, and the net income replacement ratio increases from 24% to 43%.

So waiting to claim Social Security benefits is clearly desirable for those who can wait — that is, unless Congress changes the rules entirely.

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