Retirement age

There is a proposal before congress to raise the minimum retirement age. This is a move that Democrats are fighting. And this is something that I do not agree with.

Back when I first started retirement planning, I had built in the assumption that the retirement age would be raised by the time I got that old. The baseline I had been using was age 71. The current proposal for a raise to 68 is quite reasonable. We ARE living longer than we used to be, so we do have to support ourselves longer than we ever had.

Retirement at age 65 means several things. First off, it means about forty years of earning money for daily usage, and to put away for retirement. Second, if you make it to age 65 in reasonable health, twenty years of post-earning lifetime can be expected. You never want to live past your savings, so it is a balancing act balancing life expectancy, savings rate, and burn rate once you hit retirement.

If Social Security's benefits are going to be decreased, and it looks likely that they will be, then it is up to private individuals to make up the gap. Most people can't just put more money in the kitty every month, so working a year or three extra is a fair way to make sure the gap is shortened. The 'private accounts' that are being bandied about are a higher risk way of making Social Security money last longer, but the borrowing it requires the government to undertake will hurt the economy in the long run.

This paranoia about the retirement age is come by honestly. My parents told me years ago that they were planning retirement without Social Security, since they figured the boomers would bankrupt it well before they got old enough to earn. It turns out that it'll probably still be around for them, so happy surprise. Being conservative in estimating the financial environment at time of retirement is a good idea.