Social Security faces a long-term financial crisis. The demographic bump of baby boomers that have been retiring in recent years will continue to flow into the Social Security system for many years to come, and the corresponding outflow of Social Security benefits will not only use up all available payroll tax revenue but also eat into Social Security trust fund reserves. Current projections suggest that by the mid-2030s, Social Security will have a shortfall that leaves roughly a quarter of scheduled benefits unfunded.
Many lawmakers see raising the full retirement age for Social Security benefits as a potential solution to the program's financial woes. Proponents cite the rise in life expectancies and the resulting shift in demand for Social Security as reasons to modify the retirement age upward. Yet with many of the proposals to raise the retirement age, the net impact likely won't be to get people to claim Social Security later but rather simply to reduce what they receive when they do claim.
Image source: Getty Images.
The history of Social Security's retirement age
Proposals to increase the retirement age for Social Security aren't new. One need only look back at history to see how such ideas have played out in the past. Back in the early 1980s, a grand compromise between President Ronald Reagan and a Democratic-controlled Congress led to a gradual increase in the retirement age. Over the course of nearly 40 years, the retirement age went from 65 to 67, with a long break in the middle at 66. Currently, those who have turned 62 in the past year have started to see slightly older retirement ages, and the age will rise in two-month increments annually before topping out at 67.
Now, lawmakers are looking at similar proposals for the future. Ages of between 68 and 70 have been suggested for a possible new law, with the same arguments about economic stability of the program supporting the moves. Yet amid most of the proposals, few actually stop to look at the actual impact on benefits that would occur.
Many lawmakers see raising the full retirement age for Social Security benefits as a potential solution to the program's financial woes. Proponents cite the rise in life expectancies and the resulting shift in demand for Social Security as reasons to modify the retirement age upward. Yet with many of the proposals to raise the retirement age, the net impact likely won't be to get people to claim Social Security later but rather simply to reduce what they receive when they do claim.
Image source: Getty Images.
The history of Social Security's retirement age
Proposals to increase the retirement age for Social Security aren't new. One need only look back at history to see how such ideas have played out in the past. Back in the early 1980s, a grand compromise between President Ronald Reagan and a Democratic-controlled Congress led to a gradual increase in the retirement age. Over the course of nearly 40 years, the retirement age went from 65 to 67, with a long break in the middle at 66. Currently, those who have turned 62 in the past year have started to see slightly older retirement ages, and the age will rise in two-month increments annually before topping out at 67.
Now, lawmakers are looking at similar proposals for the future. Ages of between 68 and 70 have been suggested for a possible new law, with the same arguments about economic stability of the program supporting the moves. Yet amid most of the proposals, few actually stop to look at the actual impact on benefits that would occur.
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