Social Security full retirement age shouldn’t go any higher, experts say
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More than 1 million people took to the streets in France protest increase within the country’s standard retirement age.
In America, a similar war could be fought quietly Brewing in Washington.
The full retirement age for Social Security, when workers are eligible for 100% of the benefits they earn, turn 67. Eligibility for health care coverage under Medicare is now starting at age 65.
However, as both programs face funding shortfalls, a Republican proposal suggested pushing those ages higher.
The Republican Research Committee budget, set by House leaders, called for Social Security’s full retirement age to gradually go up until it is increased by three years. Based on their proposal, those born in 1978 or later would have a full retirement age of 70.
The proposed changes would not apply to current Social Security beneficiaries or those 55 or older, according to the plan was proposed last year.
Republicans also proposed increase Medicare eligibility age coincides with Social Security’s full retirement age and then indexes that age with life expectancy.
At this week’s State of the Union speech, President Joe Biden Calling Democrats and Republicans to stand up for Americans that they won’t cut Social Security or Medicare.
Despite the unanimous timing, experts say the Republican proposal represents a cut.
Alicia Munnell, director of the Center for Retirement Studies at Boston University, said: “Social security is a very simple matter: It’s money coming in and money going out of benefits.
“There are two ways to solve this problem: You can withdraw less money or more money in,” Munnell said.
Importantly, there is no third way, Munnell said, as some have suggested raising the retirement age.
“Raising retirement age is cutting benefits,” Munnell said.
Higher retirement age ‘not right for this economy’
Social Security Amendment signed in 1983 usher in today’s staged transition to the full retirement age of 67.
The Initial qualifying age for retirement benefits is still 62 years old. However, as the full retirement age increases, claimants at the earliest age will face even more reductions in benefits.
The 1983 law prompted other notable changes, such as the provision that a portion of benefits is subject to income tax, as well as the provision that Deferred retirement credit is 8% per year for those waiting to receive after reaching full retirement age until age 70.
The 1983 changes came as the program was facing insolvency. Today, the program faces a similar dilemma. Only 80% benefits will be paid from the combined trusts in 2035, unless changes are made earlier, according to projections from the Social Security Administration.
That has led to proposals to raise the retirement age again.
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According to Teresa Ghilarducci, a labor economist and professor at The New School, raising the retirement age for the first time was a “huge failure”.
In 1983, 401(k) plans were just beginning to be introduced, and there was hope that those accounts could replace benefit plans that defined and covered half of the workforce that were not covered by insurance. retirement plan.
“That experiment was a huge failure,” Ghilarducci said. “And that hope was misplaced.”
Today, the number of workers who do not have access to a retirement savings plan while working is still high stubborn.
Ghilarducci noted that unlike in 1983, when poverty rates among the elderly were falling, they are now increasing.
“They are proposing a 40-year-old plan that is not suitable for this economy,” Ghilarducci said.
Legends work longer
The expectation 40 years ago was that people would live longer and healthier lives, giving them the ability to choose to work longer.
Ghilarducci notes that certain developments, particularly the removal of mandatory retirement age and the creation of new anti-age discrimination rules, have contributed to that prospect.
However, current data shows that not everyone has the privilege of working longer.
According to Munnell, white college-educated workers can work until they’re 70. But other groups don’t have the same luxury.
“Lower-educated groups and racial minorities don’t have as many years of healthy life expectancy as they might have,” Munnell said. “So it’s really discriminatory.”
Raising the retirement age again may only exacerbate those differences. “I think that’s the furthest you can do,” Munnell said of the 67-year full retirement age currently in place.
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There is another reason why raising the retirement age again won’t work – living longer and being able to work longer are not the same, according to Ghilarducci.
Evidence shows that the increasing retirement age does not necessarily change when people claim Social Security benefits.
“Most of the early Social Security claimants are actually still in the labor market,” says Ghilarducci. “But they are claiming Social Security early at a very low rate to supplement the low wages.”
This becomes a problem when they are no longer working and their benefits check is not enough to cover their needs.
“That could explain why the proportion of elderly people living in poverty has increased, because most people depend on Social Security for most of their retirement income,” Ghilarducci said.