With many Americans living and working longer, the retirement age has increased. A retirement bill, that was just passed by the House of Representatives, would increase the age for required minimum distributions on certain savings accounts from the current age of 72 to 75. This CNBC article outlines what changes to the retirement age could mean for people in or nearing retirement.
Covisum Founder and President Joe Elsasser, CFP®, was interviewed for the article.
"An increase in the full retirement age is just a benefit cut.
If you’re 60 and up, there is less reason to worry any prospective changes would affect your benefits. But if you’re 45 to 60 years old, it’s reasonable to plan for benefit reductions of about 5%, he said. For those who are even younger, a 10% to 15% cut is possible.
Moreover, people of all ages should also plan for worst-case scenarios in which the program does reach a point where it can only pay a portion of benefits, which may prompt as much as a 24% benefit cut for retirees.
The real importance of planning is just making sure you have all your bases covered."