Should Congress increase Social Security’s age of full retirement? It really depends on who you ask. The argument to increase the retirement age for Social Security appears to be straightforward. Social Security spends more than it generates in revenue, and Congress can address that concern by spending less.
Problem solved. Or not.
Americans live longer today than they did when Social Security was created in 1935. This is also true of the fact that Americans now pay more payroll taxes than ever before. This is a common misconception.
It should be noted that 65-year-olds haven’t been eligible for Social Security in almost 20 years. An older retiree can’t expect to get benefits in the same manner as someone who retired in the late 1990s.
When someone talks about reducing 33 percent of the gaps in the financial system, it means that Congress would lower the retirement age of someone retiring in 2035 from levels comparable to the mid-80s despite the fact that workers have contributed more than anyone else to the system.
Although this prospect might seem unfair to people in their 50s, the problem with the policy option is the time it takes to save any money. This can take many years. A standard definition of a gradual increase in retirement age would make Social Security insolvent before it reaches 68. However, this strategy would only slow down the 22 percent reductions to benefit levels.
There is a policy option that is inefficient and unfair. Discussing raising the retirement age to receive Social Security benefits to correct financial imbalances is not too dissimilar to moving the deck chairs on the Titanic to better see the iceberg.
It is a fact that the retirement age for full benefits in Social Security needs to change. Americans are living longer, and that means that they will draw more benefits over their lifetime. In other words, Social Security expands benefits virtually every year. It is not unreasonable to say that people should work longer or pay a higher payroll tax rate in order to collect their checks over a longer period of time.
Fortunately, the Social Security Administration already has an answer to this seemingly complex objective: indexing the retirement age.
This change would keep the length of retirement fixed in terms of working years. Make no mistake, this change is not a “benefit cut.” It means that people would work extra years to pay for extra benefits.
It would be a step in the right direction for those who depend on Social Security. Americans will live longer if they have paid for increased benefits.
One solution to the problem is the debate about lowering the retirement age for benefit payments. This allows Gen X members and those arriving later to receive benefits according to their great-grandparents.
However, this does not resolve the problem, and we desperately need to fix the problem.