Would Raising the Retirement Age Save Social Security? – Social Security is likely doomed without significant reform by 2035, when the trust fund runs out.
There are not enough people paying into the system. More Baby Boomers retire each day. For many retirees, this is their only form of income.
No politician can even utter the words “changes to Social Security” for fear of causing a mass insurrection. So, what can be done to save the system?
One way to reform it is to raise the retirement age. But this should not hit people who are already 55 and above. That simply wouldn’t be fair, and mass hysteria and street protests could ensue.
Have Young People Pick Up the Slack on Social Security?
The best way to raise the retirement age is to focus on young people. There would be some benefit to the survival of Social Security (should we assume it will last for another 35 years) by lifting the retirement age for young people aged 20 to 30 years old.
Currently, the youngest age for joining the Social Security system is 62. Social Security could raise the minimum retirement age for Generation Z from 62 to 65.
However, that doesn’t create solvency by 2035. There are still too many retirees and not enough people to support the money it requires to keep the program alive.
Retirees at the Poverty Level Would Be Affected the Most
If Social Security instead raised the retirement age for full benefits, from the age of 65 to the age of 68, this would lower the total amount of monetary aid, hurting middle and lower-income retirees the most.
Plus, health-wise, some people cannot work until the age of 68. What can they do if they are laid off at age 55 and cannot work again? There is a certain amount of ageism in the workplac,e and it is difficult to land an interview, much less get a job, when you are aged 55 and above.
What If You Die Before Full Retirement Age?
Plus, if you do not live until the age of 68, it is not fair that you would never receive Social Security benefits. You may be the sole earner before retirement, and enrolling in the Social Security disability program may not be possible. That means your household income could suffer when unemployed before reaching full benefit retirement (or death).
Suppose the full retirement age of Social Security were raised to 70. In that case, it is estimated by the Center for Budget and Policy Priorities that the age hike would cut total ‘scheduled’ benefits by 20 percent.
This is affected by life expectancy. “While average life expectancy at 65 has increased since 1983, longevity for the bottom half of earners has hardly risen at all — and this was true even before the COVID-19 pandemic,” the think tank wrote in a report in 2023.
There Will Likely Be a Reduction In Benefits in 2035
By 2035, when Social Security is at its most risk, retirees will only get 83 percent of their benefits – a 17 percent reduction. This could send some retirees into a situation where they could have less to eat and endanger their ability to pay rent or make mortgage payments.
When Social Security started in 1935, the retirement age was 65. In 1983, the last time there were changes to the program, “lawmakers scheduled a gradual increase in the [retirement age] from 65 to 67 for new old-age claimants born after 1937. For workers born in 1938, the [age] was set at 65 and two months. It continued to rise in two month increments for each successive birth year until reaching 66 for those born in 1943,” the Brookings Institution explained.
However, life expectancy is going up, and people need Social Security for longer. This also hurts the money available for monthly checks.
Changing the Minimum Retirement Age
Social Security could change the minimum retirement age of 62 to 63 or 64, but that would only help in the short run since these recipients would be taking payments longer than those at 65 or 67. This would also mean that those not age 63 or 64, if unemployed, would apply and receive Social Security disability, which is another pot of money in the program. This would deplete cash in the total trust fund, too.
Brookings believes the best way to close the funding gap is to “increase the FRA [full retirement age] by 3 months per birth year until reaching 70. Thereafter, index the FRA to life expectancy. Also, raise the EEA [earliest eligibility age] to 64 as the FRA increases from 67 to 69.”
The problem with that politically is that it is too difficult to understand. There would be pushback because the method is overly complicated. This would confuse current retirees and those who plan to retire soon.
That leaves changing the retirement age for young people. However, this is a means to kick the can down the road without a full fix. Thus, raising the retirement age is unpopular, complicated, difficult to explain, and fraught with political risk. It would also have to be accompanied by increasing the payroll tax and reducing benefits. This unfairly hurts low-income and middle-income recipients who must have the current level of payments to survive in a country where inflation has hit hard and the currency has been debased over the years.
Faced with a higher retirement age, many senior citizens and Generation Z workers would likely take to the streets like the French did in 2023. There is no good solution that would come without political blowback. That’s why raising the retirement age alone will not solve the problem and only create fury among the populace.
About the Author: Dr. Brent M. Eastwood
Brent M. Eastwood, PhD is the author of Don’t Turn Your Back On the World: a Conservative Foreign Policy and Humans, Machines, and Data: Future Trends in Warfare plus two other books. Brent was the founder and CEO of a tech firm that predicted world events using artificial intelligence. He served as a legislative fellow for U.S. Senator Tim Scott and advised the senator on defense and foreign policy issues. He has taught at American University, George Washington University, and George Mason University. Brent is a former U.S. Army Infantry officer. He can be followed on X @BMEastwood.
What Happens Now On Social Security?
