As the average life expectancy for Americans increases, individuals are facing new challenges when it comes to saving for a longer retirement period.
One strategy proposed to address pending shortfalls in Social Security and other retirement income gaps is to postpone the retirement age, currently set at 65. But pushing back the retirement age could be detrimental for some older Americans who rely on Social Security or pensions, Mark Fried, president of TFG Wealth Management said.
“Middle-to lower-income individuals really depend on it and maybe haven’t been able to save as much,” he said. “Pushing the retirement age back for Social Security in a broader sense will be helpful, but we’re really hurting certain segments of society who find themselves in a difficult economic position not of their own doing.”
Fried added that it’s also harder for older Americans to find jobs or to re-enter the workforce. For an older individual seeking work, employers could view them as a liability, especially as an increasing number of older employees are dying on the job.
Still, in July, the percentage of Americans over the age of 65 who were still working at least part-time was at the highest rate in 65 years, according to the Bureau of Labor Statistics.
Social Security funds are expected to run out in less than 20 years, so without intervention, Americans could face a reduction in benefits.
Fried said means testing is one strategy that could improve the program’s outlook. Means testing would guarantee benefits to those under a certain non-Social Security related retirement income threshold, focusing the benefits on those who need them the most. For example, one proposal would consider those with non-Social Security retirement incomes above $110,000 ineligible for benefits and benefits would be reduced for individuals with more than $55,000.
As previously reported by FOX Business, there are some ways individuals can bring their retirement plans in line with the current economic circumstances.