Some Experts Believe Social Security's Retirement Age Shouldn't Increase as It Approaches 67

• Author: Russell Sawayn
• Posted: 2024-05-20

The Social Security complete retirement age, at which time employees are entitled to all of the perks they have accrued, is rising to 67. Currently, Medicare benefits begin at age 65 for those who qualify. However, one Republican plan has proposed raising those ages as both programs confront financial shortages.

The full retirement age for Social Security will steadily rise until it is raised by three years, according to the budget proposed by the Republican Study Committee on behalf of House leaders. According to their plan, the complete retirement age would be 70 for those who were born in 1978 or later.

According to the proposal that was suggested last year, neither existing Social Security recipients nor those 55 and older would be subject to the proposed adjustments.

Along with increasing the eligibility age for Medicare to match the complete retirement age for Social Security, the Republicans also want to index that age to account for changes in life expectancy.

President Joe Biden urged Democrats and Republicans to rise during the State of the Union speech last month to demonstrate to Americans that they would not cut Medicare or Social Security.

Despite the apparent consensus, experts claim that the Republican plan would mean cuts. According to them, the issue with Social Security is as straightforward as money flowing in and money moving out in benefits. You can either have more money come in or less cash go out to fix this. There's no third option. Raising the retirement limit is a benefit reduction.
 

An Increase in The Retirement Age Won't Help the Economy

The 1983 Social Security changes that were signed into law brought about the gradual change to a complete retiring age of 67 today. The age of 62 remains the original eligibility for retirement payments. However, those who enroll in Social Security at the earliest age experience higher income reductions as the complete retirement age rises.

Other significant changes brought about by the 1983 legislation include the introduction of income taxation of a part of benefits and the provision of 8% annual delayed retirement allowances for people who wait to file claims after reaching full retirement age until age 70.

The program was in financial trouble when the modifications were made in 1983. The program is now faced with a comparable problem. According to estimates, if no adjustments are made sooner, the merged trust funds will only be able to pay out 80% of payments in 2035. This has resulted in proposals to increase the retiring age again.

However, the first attempt to raise the retirement age was a huge failure, according to labor economist and scholar Teresa Ghilarducci.

The introduction of 401(k) plans had just begun in 1983, and there was anticipation that they would eventually displace defined benefit programs and provide financial assistance for the workforce's 50% of uninsured workers.

Today, there are still a persistently large number of employees without access to a workplace retirement savings plan. Ghilarducci observed that senior poverty rates are now rising as opposed to falling in 1983.
 

The myth of Working for Longer Years

40 years ago, it was anticipated that individuals would live longer, be healthy, and be able to choose to work longer. Ghilarducci observed that this perspective was influenced by a number of events, most notably the repeal of mandatory retirement ages and the adoption of fresh anti-age discrimination laws.

Data, however, now indicates that not everyone enjoys the benefit of working longer years.

White employees with college degrees can likely continue to work until they're 70. Other communities, however, are not as fortunate. Racial minorities and groups with lower levels of schooling simply do not have enough good years of life to do it. This makes it extremely discriminating. Re-raising the retirement age might only make those disparities worse.

The ability to work longer and survive longer aren't the same things, according to Ghilarducci, which is another reason why increasing the retirement age once more would not be successful. Evidence suggests that people's eligibility for Social Security payments hasn't particularly altered as retirement ages have increased.

Ghilarducci claimed that the majority of individuals who apply for Social Security early are still employed. However, in order to boost their poor earnings, they are filing for Social Security earlier and at a very low rate.

When they cease working and receive insufficient benefits to meet their requirements, this becomes a problem. Given that the majority of people rely on Social Security for the majority of their retirement income, Ghilarducci suggested that this may be the cause of the rising senior poverty rates.