Younger baby boomers seem to catch on quick that voluntarily taking early retirement can be a recipe for instant poverty. According to a recent article by Reuters, "Advice for the new anti-retirees," a growing number of baby boomers plan to delay retirement. Two years ago, 42 percent of baby boomers said they intended to delay retirement. Now, almost 62 percent of baby boomers intend to wait to take that Social Security check for life.
As a Gen-Xer, I was a bit shocked when the older baby boomers I met a few years ago said they had retired early. Now those people have reached their full-retirement age, but seem to be struggling since they locked in at the lower Social Security payout. For most of Generation X, early retirement doesn't make any financial sense.
Adapting to a changing world
When Generation X nears retirement, there will probably be a lot less money in the Social Security system. Experts say there has been an un-baby boom with an increase in fertility problems and a tendency of young people to delay having a family. With fewer younger people, Generation X and the following generations will have only a fraction of the Social Security payments senior citizens have today. Most likely, there will be fewer people in the workforce paying into the system.
Stepping aside for the next generation
At a certain point, every retiree has to decide if it's time to retire gracefully while he or she is still having the most to offer. I don't plan to retire early, but I also have no intentions of working past my full retirement age. According to the Reuters article, the AARP reports that about 18 percent of people over the age of 65 are still working. In 1985, only about 10.8 percent of senior citizens remained in the labor force. Of course the full retirement age for Generation Xers is 67.
Lowering the full retirement age
Instead of raising the full retirement age to as high as 70, lawmakers should consider lowering it back to 65. Many of the baby boomers I know couldn't even make it to 65 to receive their full retirement age. Generation X's retirement benefit at age 65 is reduced to 86.7 versus 100 percent if they waited until age 67.
Checking the charts
Before making a premature decision to retire early, it pays to review the Social Security Administration's website to see how a Social Security benefit is reduced depending on a person's age when they start taking the retirement benefits. By checking the Social Security charts rather than my astrological charts, I learned I could get 93.3 percent of my full benefits at age 66. For me, that's close enough.
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