Change in Retirement Age in the US – New Proposal Revealed

Thousands of older Americans are worried about the future of Social Security, with discussions about new proposals, potential payment cuts, and a probable shortfall in funds. Recent news suggests significant changes for retirees, including a proposed new retirement age.

Rachel Greszler, a senior research fellow at the Roe Institute, has introduced a proposal to raise the full retirement age to 70. This change, if enacted, would require millions of future retirees to wait longer to receive their monthly Social Security benefits.

New Retirement Age Proposal

Rachel Greszler’s proposal aims to address the Social Security Administration’s (SSA) impending fiscal cliff by raising the full retirement age (FRA) to 70. According to Greszler, this change is necessary to ensure the stability of the trust funds that support the nation’s primary retirement, survivor, and disability insurance (RSDI) program. The SSA’s 2023 Trustees Report indicates that Congress must act to secure these funds, which are projected to run out of money by 2035.

Impact on Retired Workers

Currently, the full retirement age in the United States varies by birth date and is gradually increasing as life expectancy rises. For those born after 1960, the FRA is 67. Early retirement can begin as early as age 62, but taking benefits early results in reduced monthly payments. Greszler’s proposal to raise the normal eligibility age to 70 aims to address the funding challenges facing the SSA.

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Financial Stability

Greszler argues that raising the retirement age is not only about financial stability but also reflects changing demographics and employment trends. With longer life expectancies, better healthcare, and less physically demanding jobs, many older Americans can continue working beyond traditional retirement ages.

This benefits both the workers, who can earn more money, and younger employees, who can learn from the experience and mentorship of older colleagues. Additionally, older workers have more options to transition gradually into retirement rather than stopping work abruptly.

Addressing the Shortfall

While raising the retirement age is a crucial step, it alone is insufficient to address the entire deficit facing the Social Security system. Greszler notes that this change would only resolve 20–30% of the program’s deficits. Inflation adjustments are also necessary to reduce another 20–25% of the remaining shortfall. Financial expert Stephen Kates from RetireGuide.com argues that raising the eligibility age simplifies and cuts benefits, resulting in a monthly income reduction of about 30 percent. If the earliest or full retirement age is raised, future retirees will receive fewer benefits and a later start date.

Inflation Adjustments

Greszler emphasizes that accurate inflation adjustments are vital for preserving the Social Security system. Without these adjustments, raising the retirement age alone will not be enough to secure the program’s future. The Center on Budget and Policy Priorities (CBPP) also warns that if policymakers do nothing, the projected reductions in Social Security payments in the 2030s will occur anyway. Therefore, a comprehensive approach, including both raising the retirement age and adjusting for inflation, is necessary to ensure the long-term viability of Social Security.

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The proposed changes to Social Security, including raising the retirement age to 70, aim to address the program’s impending financial challenges. While these changes are necessary for the system’s stability, they also highlight the need for additional measures, such as accurate inflation adjustments, to fully resolve the deficit. As discussions continue, it is crucial for retirees and future beneficiaries to stay informed about these developments and know their potential impact on Social Security benefits.

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