The retirement age in the United States is changing again, and millions of people who thought they could retire… sorry my der, you’re going to have to wait.
Starting in 2025, those born in 1959 won’t be able to access 100% of their Social Security benefits until they turn 66 years and 10 months old! And if you were born in 1960 or later, your new minimum age will be 67, two more months of work before reaching the golden years. A small adjustment, but one that directly affects when you’ll be able to stop working, the dream moment of our lives!
Many Americans still believe they can retire at 65… but that’s a thing of the past. The law has been gradually raising the full retirement age for years, and now we’re entering a key stage. Those born in 1958 could retire at 66 years and 8 months; those born in 1959 will have to wait two months longer, and the next ones will go straight to 67.
What changed in the retirement age?
This change comes from a law passed in 1983, which established a gradual increase in the retirement age from 65 to 67 years old. It seemed like we’d never get to 67… but now it’s a reality. If you were born in 1960 or later, you’ll have to wait until your 67th birthday to say goodbye to your boss.
What if I want to retire at 62?
Good luck. But you can do it… just know that you’ll lose 30% of your benefits every month. This is called early retirement. You can request it starting at age 62. Our recommendation is that, if your body can handle it, you go at least beyond FRA (Full Retirement Age) to get all the money you earned with the sweat of your brow.
What if I wait past 67?
You can also delay your retirement if you want to, and the state will reward you. For each year you postpone your retirement past full retirement age, you can earn an additional 8%, up to a maximum of 32% if you wait until age 70.
Strategies to retire early without losing everything
- It’s called “gradual retirement,” and it allows you to reduce your work schedule (working three or four days a week) to keep covering essential expenses like health insurance and food without touching your savings. It’s not full-time work, but it’s not full retirement either, it’s just going in to work for a bit!
- Another piece of advice experts always give is to save between 18 and 24 months of basic expenses in a high-yield savings account, mainly because old age brings a lot of unexpected costs, any bad market moment or an unexpected medical bill… and you need to be ready for that.
- Make use of your home, and if you have a spare room or an unused parking space, renting it can bring in between $700 and $1,000 a month. In urban areas, even the parking spot can generate $150 to $300 monthly. No speculation here, we won’t snitch.
- Take advantage of every discount you can. Stores like Costco, Home Depot, or Trader Joe’s offer part-time jobs with health coverage starting at 20 hours a week.
Tax tactics if you retire early
Start by using taxable accounts (like regular investment accounts) before touching your 401(k) or IRA. That way you avoid penalties and let your retirement funds keep growing.
You can withdraw the money you contributed (not the gains) without paying taxes or penalties. It’s an ideal option to get money without hurting your tax return.
If you keep your income low in early retirement, you may qualify for health system subsidies (Affordable Care Act) and save thousands on medical insurance until age 65.
From teaching online for $30 an hour to pet sitting or selling crafts, there are ways to generate income without going back to full-time work.
What if Congress raises the age to 68 or 69?
Even though there’s no law making it official yet, Congress is already discussing raising the retirement age beyond 67… Today’s young people (well, some of us already feel the knee pain too…) are starting to realize that maybe, when we reach the golden years, we might not be lucky enough to have a decent retirement…
If you ask us, we’re dying to retire already, and everything seems to point to 67 being here to stay! Start preparing your golden years now, later it’ll all be a rush!
