Should Congress Increase Social Security’s Age of Full Retirement? – Opinion

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It all depends on who you ask. The American Academy of Actuaries is in favor of the change, while Boston College’s Center for Retirement Research opposes the move. The argument for raising the Social Security retirement age seems straightforward. Social Security is spending more than it earns in revenue. Congress has the ability to address this concern by spending less.

Problem solved.

Or not. This analysis simplifies a complex topic, which leads to the most essential aspects being lost.

Americans now live longer lives than the 1935 creation of Social Security. It is equally true – but rarely noted – that Americans are paying substantially more in payroll taxes than they did at that time. Since 1940, the average life expectancy for a retired person has increased by approximately 50 percent. In real terms, over the same period, worker’s total payroll tax exposure has increased by approximately 1000%.

The fact that a 65-year old can live for almost 20 years without being eligible for Social Security benefits should not be discussed when discussing life expectancy. The age that someone is eligible to receive full benefits has been increasing since 2000 and it will continue to rise until 2027. Consider the time it takes to retire and how long you have to work to earn that check. A full-time retiree should be able to expect to collect benefits roughly on the same terms that a recent retiree from the 1990s.

When someone talks about solving 33 percent of the system’s financial gaps, the estimate implies that Congress would push back the length of retirement for someone retiring in 2035 back to the levels of the mid-1980s, despite the fact that these workers will have paid more into the system than any previous generation.

This prospect may seem unfair for people in their 50s, but the bigger problem with the policy option is how long it takes for any savings to be realized. It can take decades to achieve maximum effect.

For example, Social Security could be heading for insolvency if it is governed by a single definition of a gradual increase in retirement age. This strategy will only push back the 22 percent reductions in benefit levels by a few weeks.

We have an option for policy that is ineffective and unfair at the moment. Talking about increasing the retirement age in Social Security as a solution to the system’s financial imbalances is not terribly different than moving the deck chairs on the Titanic to get a better view of the iceberg.

The retirement age to receive full Social Security benefits must be increased. Americans are growing older, which means they can draw greater benefits for their entire lives. Social security benefits are increasing almost every year, which means that they expand. To collect checks for a longer time, it is reasonable to suggest that employees should be able to work more or pay higher rates of payroll tax.

Social Security Administration has a solution for this difficult objective. It is indexing the retirement age.

This would ensure that the retirement age is not reduced in relation to 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.

The narrowing the scope of the debate is another important step for the people who depend on Social Security. This is where the unproductive and controversial question of changing the retirement age becomes a major problem. After Americans pay for increased levels of benefits, it becomes irrelevant how Americans can live longer.

At this stage, there is a debate on changing the maximum retirement age. This will help to solve a portion of Social Security problems by allowing members of Gen X (and those coming later) to stop collecting benefits according to their parents and start collecting under the rules of their great-grandparents.

But that’s just one part.

Brenton Smith[email protected]) is a policy advisor at The Heartland Institute, with work appearing in nationally recognized publications including Barron’s, Forbes, MarketWatch, The Hill, USA todayFind out more.

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