The U.S. government is thinking about raising the minimum retirement age in order to fix the problems with Social Security. An idea from a group of right experts says the age should be raised from 62 to 70.
The plan is meant to help fix the ongoing budget deficit of the Social Security Administration (SSA), which will become very important in 2035.
Americans can leave as early as age 62, but their benefits will be less if they do so before their full retirement age (FRA). The year of birth makes a difference. If they retire at age 70, they can get all of their benefits.
This method is backed by the Roe Institute scholars at the Heritage Foundation.
Social Security checks will change due to the retirement age shift
The Roe Institute recently said that the minimum retirement age should be raised by one or two months every year until it hits seventy.
They say that Americans live longer and are healthier than they were a generation ago, which means they can work longer hours at jobs that are not as hard on their bodies.
One idea being looked at to make sure that Social Security will always have money is raising the retirement age. Some experts say that the program’s deficit could be cut by 20% to 25% by changing the inflation rates that are used to figure out monthly payments.
But not everyone agrees with these ideas. Some people say that workers who make low wages would be hurt if the retirement age was changed.
Additionally, people who have jobs that are hard on their bodies might be pushed to work past the age when they can’t. It is still not clear if Congress will agree to the plan to raise the retirement age to 70.
A lot of work needs to be done on it. But in the coming years, people will talk more and more about the future of Social Security and the need to find ways to keep it going.
Younger retirees could end up earning lower benefits in the future
In the years before 1983, the minimum retirement agewas 65, but the Social Security Amendments of 1983 gradually raised it to 67 for those born in 1943 and later, between 1943 and 1954, and from 1960 and later.
The Social Security system underwent a major overhaul in 1983 when the retirement age was raised from 65 to 67 for those born in 1960 or later as part of a package to strengthen the agency’s finances.
In addition, to avoid disrupting the retirement plans of older workers, lawmakers maintained the typical retirement age of 65 for those 41 and older, while the standard retirement age changes applied to those 40 and younger.
However, raising the retirement age could mean lower benefits for younger retirees, especially those from low-income families. The full retirement age (FRA) of 70 or older has been recommended by the Republican Study Committee and other lawmakers.
Raising the retirement age reduces benefits for all new retirees and first-time Social Security claimants. These reductions could be significant because lower- and middle-class beneficiaries are increasingly dependent on Social Security income.
They have not experienced the increases in life expectancy that people with higher incomes have, which are often cited as arguments in favor of raising the typical retirement age.
Average life expectancy at 65 has increased since 1983, but even before the COVID-19 epidemic, life expectancy for the bottom half of earners had not increased significantly.
These two unsubstantiated claims are often used by proponents of raising the retirement age. The US population is living longer.
Moreover, the life expectancy gap is growing, with black workers experiencing lower earnings and shorter life expectancies than white workers, largely due to structural racism, discrimination in education, housing, health care, employment, and systemic bias in the criminal justice system.
Proponents advocate large adjustments to Social Security to prevent automatic cuts when the trust funds are depleted, but this argument is paradoxical because raising the normal retirement age will achieve the same goal over time.
Raising the retirement age to 70 will reduceaverage lifetime benefits for new retirees by 20%, but if Congress does nothing, Social Security’s reserves will be depleted, resulting in a 23% reduction for all beneficiaries.
Therefore, raising taxes would be a fairer and more efficient way to pay for essential Social Security payments, especially for higher-income individuals with faster life expectancies and incomes than the national average, since Social Security benefits are already low.