Workers born before 1938 were able to collect 80 percent of their full benefits at 62. That figure is scheduled to shrink gradually for workers born later, dropping to 70 percent for those born after 1959. The changes are a step toward shoring up Social Security's future, which will be tested by the retirement of 78-million baby boomers who start turning 62 in 2008. Not only will there be fewer workers supporting each retiree, but improving life expectancies mean each generation of retirees will collect benefits for more years than the one before it. Nobody knows whether raising the normal retirement age will prompt workers to stay on the job longer.
History shows most workers prefer early retirement over higher benefits.
Seventy-two percent of current Social Security beneficiaries took reduced benefits to retire before 65. And companies that offer pension plans cannot legally raise their plans' retirement age to match Social Security's. Under current federal law, an employee who has been in a plan at least five years is entitled to pension benefits no later than age 65. But he said that if employees decide to delay retirement significantly, companies could face higher costs for health and disability insurance and sick leave. The change in the Social Security retirement age also could increase costs for employers offering certain types of pension plans.