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Baby boomers' Social Security will not pay full benefits until they are between 66 and 67 years old, although they will still be eligible for Medicare at 65. As in the past, baby boomers can opt for early retirement as early as 62, but benefit amounts are greatly reduced.
For baby boomers, Social Security may play a changing role from that which it played for their parents and older generations. For one thing, changes in the law mean that all baby boomers will not reach the so-called “normal retirement age” or “full retirement age for social security benefits at the traditional age of 65 but will need to be older. Boomers born between 1946 and 1959 will need to be at least 66 and those born from 1960 through 1964 will need to be 67 to receive full benefits. The exact age increases by increments of months depending on birth year.
Of course, like all eligible for Social Security Retirement Benefits, they may opt to retire as early as the age of 62, but benefits are greatly reduced with early retirement with the percentage of reduction being determined by the number of months the retiree is short of their full retirement age. They will likely receive more payments for the rest of their lifespan, but will have much lower monthly incomes. Those who have other retirement and pensions plans may also see their benefits reduced according to how much these other benefits pay.
All baby boomers will become eligible for the medical benefits of Medicare at the age of 65, or earlier if they become disabled. It is important for baby boomers to know that in most cases they should apply for Medicare benefits, even if they are not actually retiring at that time, within three months of the 65th birthday. Failure to do so may mean that premiums for some options may be more expensive.
About 80% of baby boomers who are nearing age 65 are stating that they plan to defer retirement for some time beyond their official full retirement age. This will mean increased payments when they do finally retire although the total number of payments may fall because they do not have as much time left to live.
Baby boomers' Social Security may not be as dependable as it has been for past generations. Because the workforce for the next younger generation is much smaller and unemployment is high, payments into the system are rather anemic and there are fears that the system could run out of funds by 2037 by some estimates, and that Medicare could run short even sooner. With baby boomers living longer lives, action needs to be taken to insure that they can be funded in their retirement years.