Retirement Age in USA
If you want to know about retirement age limit in USA, your search is over. This article will give you detailed information about the same and the various issues connected with it, like social security benefits.
Omkar Phatak
According to the U.S. Census Bureau, the retirement age in USA is 62 years of age. The average length of retirement, that is, the period from retirement till death in the country is 18 years on an average. However, one must remember that this number - 62, is averaged out age limit for retirement, over the public and private sectors. Of course, when to retire is an entirely personal decision and there is a very large spread, as far as this number is concerned. The legal age for retirement, to claim full social security benefits, is 65 years (for people born in 1937 or earlier), under the social security act. However, this too has modifications, depending on the year of birth, which I will talk about later, in this OpinionFront article. The average age of retirement in USA has continued to decrease in the past 100 years, owing to many socioeconomic factors. I will also discuss the futuristic changes that could be made with regard to the age limit, in United States of America.
| Birth Year | Normal Retirement Age | Approximate Percentage Reduction in Monthly Social Security Benefit (If you retire at 62) |
| 1937 or Before | 65 years | 20.00% |
| 1938 | 65 Years, 2 Months | 20.83% |
| 1939 | 65 Years, 4 Months | 21.67% |
| 1940 | 65 Years, 6 Months | 22.50% |
| 1941 | 65 Years, 8 Months | 23.33% |
| 1942 | 65 Years, 10 Months | 24.17% |
| 1943-54 | 66 Years | 25.00% |
| 1955 | 66 Years, 2 Months | 25.83% |
| 1956 | 66 Years, 4 Months | 26.67% |
| 1957 | 66 Years, 6 Months | 27.50% |
| 1958 | 66 Years, 8 Months | 28.33% |
| 1959 | 66 Years, 10 Months | 29.17% |
| 1960 or Later | 67 Years | 30.00% |
*Consider your year of birth to be the previous year, if you are born on 1st January.
Retirement Age and Social Security Benefits in USA
The Internal revenue service refers to the average age of retirement in US as 'Normal Retirement Age (NRA)'. They refer to the age limit, according to a retirement plan. They are the arbitrators who decide whether employees should get full benefits, when they retire. Though, it is generally agreed across the country, that the mandatory retirement age is 65 years, the normal age limit, according to IRS is different.
When talking about social security retirement benefits, there is a gradation in what they call 'full retirement age'. This varies from age 65 to age 67, depending on what year the person was born. The definitions for these age limits are decided by the office of the chief actuary and they explicitly specify at what time an employee can receive full benefits for himself.
In 1983, some amendments were made in the social security act. These amendments changed the full retirement age considered by the IRS, for people born in the year 1938 or after that year. The details are as follows. If a man is born in 1938, then his retirement age is ordained to be 65 years and two months. If the person is born in any year from 1943 to 1954, then the mandatory age limit for retirement is 66. For people born from the year 1955 onwards, there is an addition of two months per year. That is, a person born in 1957, will have a 'Normal Retirement Age' of 66 years and 6 months.
If the person retires before his NRA is reached, the social security benefits he gets, are reduced. In USA, one can retire at age 62; the catch lies in the fact that the quantum of monthly social security benefits received, is then reduced. On the other hand, if anyone retires past his or her mandatory retirement age USA, he or she gets increased social security benefits. To sum it all up, those born before 1938 can claim full social security benefits, if they retire at age 65 or later, while those citizens born after 1960s can only claim full benefits at age 67. Those between these two limits must follow the '2 month additive' rule mentioned above, to calculate there normal age of retirement. The above table will make it easy for you to identify your normal retirement age and help you compute the percentage of monthly social security benefit reduction, you may expect on retiring before NRA at age 62.
As the figures in the table above signify, it's best to delay retirement and claim larger social security benefits. The earlier you retire, smaller is your benefit check for each month. So choose your retirement day wisely, if you are counting on social security!
Plans of Raising Retirement Age
Retirement age and life expectancy are closely interlinked. Since the 1980s, life expectancy in US has been increasing, due to the improved health care facilities. The length of retirement, that is, the average life span of a US citizen after retirement has risen to 18 years, against the earlier average of 13 years. By 2040, it's predicted that the length of retirement will increase to an average of 20 years. That's why, it is the recommendation of the American Academy of Actuaries that it is again time to raise the age limit, in the near future. There is no legislation as yet, but we can expect one in the future.
Retirement planning is something which every one of us should carry out meticulously. It is a essential to plan and invest for the future, while you are working. Starting an individual retirement account (IRA) is a good idea. Explore all the retirement plans made available by the government and private companies. Saving and investing, while you are working, is the only way of ensuring a comfortable life past retirement.
