Like much of the developed world, Germany is facing an aging population that is making its national pension system unsustainable.

To fix the problem, a panel of economic experts has floated a controversial idea: raise the retirement age to 73 by the year 2060, up from the current age of 65, according to the Telegraph. (1)

Germany isn’t the only country considering this drastic move. Denmark is set to raise its retirement age to 70 by 2040 (2) while France raised its retirement age from 62 to 64 in 2023 despite public backlash. (3)

Similar proposals have been floated in the U.S., though their legitimacy is unclear. When asked in September if a retirement age hike could be on the horizon, Social Security Commissioner Frank Bisignano said “everything’s being considered.” (4) However, that comment was later withdrawn. (5)

While a higher retirement age could one day be on the horizon for millions of American workers, it’s not a silver bullet for the Social Security system’s funding challenges, and could come at a huge cost to many retirees.

According to the Center on Budget and Policy Priorities (CBPP), proponents of raising the retirement age point to the Social Security trust fund’s imminent depletion and rising life expectancy as key reasons for the move. (6)

The underlying trust funds are on track to be depleted by late 2032, according to the Committee for a Responsible Federal Budget (7), which could result in a 24% benefit cut across the board or the equivalent of a $18,100 cut for a couple retiring at the start of 2033.

Meanwhile, life expectancy at birth has jumped from 73.7 in 1980 to 78.4 as of 2023, according to the Peterson-KFF Health System Tracker. (8)

Raising the retirement age could reduce the amount of benefits paid out from the Social Security trust fund and be more in line with increases in life expectancy.

However, opponents argue raising the retirement age is a de-facto benefit cut for all workers and is particularly negative for vulnerable workers. A retiree turning 62 in 2034 could lose a total of $100,000 in total benefit payments if the retirement age is raised to 69, according to Senator Elizabeth Warren. Similarly, the CPBB found that the average lifetime benefit cut would be nearly 20% if the retirement age is lifted to 70.

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It should also be noted that America’s life expectancy is lower than most developed countries. Average life expectancy at birth, as of 2023, was roughly 4.1 years lower than the average of comparable countries, according to the Peterson-KFF Health System Tracker.

The average American male is expected to live to the age of 75.8, which means a retirement at 70 would give most men less than six golden years to enjoy benefits from a system they spent their whole careers paying into.

Low-income seniors are likely to die even younger. Older Americans who earn less than $20,000 a year pass away nine years sooner than those who earn $120,000 or more, according to a recent report (9) from the National Council on Aging (NCOA) and LeadingAge LTSS Center @ UMass Boston.

In other words, raising the retirement age could prevent many lower-income seniors from ever collecting a benefit payment.

Nevertheless, even if the retirement age isn’t raised over time, preparing your retirement plan for such a drastic move could put you in a better financial position.

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If the full retirement age is raised to 69, 70 or beyond, you should bolster your personal nest egg to prepare for lower lifetime benefits.

Maxing out your 401(k) and IRAs could help you cover any shortfalls from the retirement age shifting and even put you in a position to retire early, regardless of when Social Security kicks in.

You could also plan for a longer career, which gives you more time to save and invest.

Many Americans could face early retirement due to factors beyond their control, such as health or layoffs. Setting money aside in a tax-advantaged wrapper, such as the Health Savings Account, could help you mitigate this risk and cover medical expenses.

While it’s impossible to predict future reforms to the Social Security system, you could prepare for any eventuality with a wider personal safety net and a retirement plan that is less reliant on the system.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

The Telegraph (1); The Telegraph (2); NPR (3); SmartAsset (4); Fortune (5); Center on Budget and Policy Priorities (CBPP) (6); Committee for a Responsible Federal Budget (7); Peterson-KFF (8); National Council on Aging (NCOA) and LeadingAge LTSS Center (9).

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.