23 Jan Retirement age for Social Security
Raising the age of eligibility for Social Security and Medicare is a much debatable issue because of a myriad of socio-economic aspects. The current age to begin receiving benefits for Social Security is set at 65 for those born before 1938. It rises to 67 for those born in 1960 or later. Let’s review the flip sides of this proposed change. With continued increasing longevity, proponents believe raising the age of retirement would put significantly less pressure on the uncertain economy and lower the actual expenses incurred by the country on retirement security programs. While several foundations think tanks, women’s groups and other social security “preservationists” vehemently oppose such a change. A quick analogy between these two groups might help us decide better.
Many proponents argue that working longer contributes significantly towards retirement security as the stock market’s plunge has depleted savings and companies have withdrawn their support from providing benefit plans. Social Security is running a tremendous cash-flow deficit as it spends more than it receives annually in payroll taxes. They further suggest that this change will enable workers to save more money before retirement. It also provides an impetus to economic growth through higher income tax revenues and better market incentives. Statistics show that in the last 50 years, longevity for men has increased by 17 years and by 20 years for women. Life expectancy is expected to further rise in the coming years and the chances of living well over 67 years are bright. This security reform would add a significant number to the workforce and ensure better retirement security. Proponents also believe that working longer would enhance the general wellbeing of a worker by keeping him driven and motivated.
Social security preservationists think there’s a big downside to this security reform. They believe such a change would have adverse effects on low-income groups and women, who primarily rely on a benefit plan. Many lower-income workers have jobs that are too physically demanding, and their working conditions take a severe toll on their health. Increasing the early filing age would increase financial hardships for many workers. Early retirement would lead to a 30% cut in benefits permanently and that would make matters even worse for low-income workers and women. Rising obesity rates in the country may also prevent people from working well into their sixties. Richard W. Johnson from the Urban Institute suggests exempting workers in physically demanding occupations by implementing a more progressive social security formula as the life expectancy for this group hasn’t much improved.
It is a burning question of our times and one which affects the quality of life of an individual. On the other hand, there’s an alarmingly dwindling reserve to support security programs. What are your thoughts? Should the government raise the retirement age for Social Security?