Gen X becomes the first generation with a full retirement age of 67, risking permanent benefit reductions and earnings test penalties.
Generation X will be the first cohort to face a full Social Security retirement age of 67, locking in a 30% permanent reduction for those who claim benefits at 62. The change affects anyone born in 1960 or later, complicating early retirement plans for workers eyeing semi-retirement through gig work or side businesses.
Earning over $24,480 annually while claiming early triggers Social Security’s earnings test, withholding $1 in benefits for every $2 above the limit. The Social Security trust fund is projected to deplete reserves by Q4 2032, potentially cutting payable benefits to 78% regardless of filing age.
The trend of Gen Xers scaling back paid work to pursue hobbies or gigs may accelerate early claiming, amplifying long-term financial risks as retirement costs rise.