The Miami Herald reports today on consideration among Economists and members of Congress of raising the minimum age for Social Security benefits to 70.
No one who’s slated to receive benefits in the next decade or two is likely to be affected, but there’s a gentle, growing and unusually bipartisan push to raise the retirement age for full Social Security benefits for people born in the 1960s and after.
The suggestions are being taken seriously after decades when they were politically impossible because officials – and, increasingly, their constituents – are confronting the inescapable challenge of the nation’s enormous debt.
Social Security was created in 1935 with a retirement age of 65, but since then life expectancy at that age has increased by about six years, according to the National Center for Health Statistics.
Today the full Social Security benefit retirement age is 66 for people born from 1943 to 1954. It then increases by two months for each birth year (66 years and two months for those born in 1955, 66 and four months for those born in 1956 and so forth), until those born in 1960 or later get full benefits at age 67.
Raising the age eventually to 70 could prove to be politically acceptable because it wouldn’t have an immediate social impact, but it would demonstrate that politicians are resolute enough to mend one of the government’s most popular social programs and to tackle the national debt.
To borrow a phrase from The One: Let me be clear. I was born in 1970. I guarantee I will not get Social Security. Ever. By the time I hit 65, there will be means testing, and Social Security will be open about the fact that it is simply a wealth redistribution scheme from people who work to people who don’t, with a new twist that people who don’t work who don’t need Social Security (and all of my financial planning is done with the assumption that Social Security will not be available) also pay for those who do. I’ll be 69 in 2039, the year they admit they won’t have enough money.
Last week the CBO issued a report suggesting that some adjustments must be made to Social Security’s financing. It projected that under the current rules, the system won’t be able to pay scheduled benefits starting in 2039.
However, the CBO also found that raising the full retirement age to 68 starting with workers born after 1966, or to 70 for workers born after 1978, and raising it gradually before that wouldn’t significantly improve the system’s financial outlook.
The CBO said that raising the age to 68 would reduce Social Security spending by only 3 percent, or 0.2 percent of the GDP, in 2040. A retirement age of 70 would save 6 percent, or 0.4 percent of the GDP.
The lawmakers stress that raising the full-retirement age should be only one of a series of Social Security changes.
Their views represent a subtle but important shift. Traditionally, Social Security was considered “the third rail” of politics – touch it and you die – because people cherished their benefits so much.
That changed only once, in 1983, when a bipartisan Social Security commission’s recommendations led to increases in payroll taxes and a gradual rise in the retirement age, putting the system on a path to solvency for decades.
In the years since, however, proposals for more changes have gone nowhere, but the debt threat is forcing another look.
No one in Congress has the courage to stand up and say what is true, that Social Security needs a complete overhaul (or, if I had my way, needs to be eliminated). We can not continue to make promises like this, and we can’t afford to keep the ones already made. So plan like I am, assume Social Security will be gone when you retire.