New retirement age – How it affects Social Security benefits

Retirement continues to be a hot button topic for Americans. With inflation still sky high and with little signs of slowing down, it seems like a pipedream that most will be unable to afford, let alone as the program stands now. Currently, if an American wants to officially retire and start collecting benefits, they must wait until they are 62 years old, and although they would not get the maximum Social Security advantages if they chose to do so at this age, it is still one of the most used options for elderly Americans.

Of course, most people chose to wait until what is known as Full Retirement Age (FRA), which for most falls somewhere between 66 and 67 years old, and collect 100% of their owed benefits, but those are not the only, or the most profitable of option. The maximum retirement age is 70 and it does bring some advantages most Americans are unaware of or unable to take advantage of, however, this whole system could change soon as there is a proposal to raise this minimum retirement age to 70 and make it universal.

Although it is just a proposal at the moment, some analysts believe it could gain enough support to become a reality, which could impact the benefits people receive from the Social Security Administration (SSA).

Not necessarily a bad option, this proposal to raise the retirement age to 70 is supported by a group of conservative experts, who see it as a way to address the imminent funding crisis facing the SSA, according to an article by Rachel Greszler, a senior research fellow at the Roe Institute, published by the Heritage Foundation.

The impact on Social Security

Funding is one of the main concern when it comes to the SSA as currently, the U.S. Congress is facing a problem that will fully present itself in 2035, when the Administration will not have sufficient funds to pay benefits at 100%. Therefore, the need to come up with a feasible plan to extend the life of the program has been in the works for a few years already. The plan would need to address the solvency of the organization regarding the trust funds that support the retirement, survivors, and disability programs, as well as attempt to improve the sustainability of it in the decades to come to avoid going through it in the future.

According to Rachel Greszler’s article, the idea that policymakers should gradually increase the full retirement age from 67 to 69 or 70 years holds water, as, by raising it one or two months per year and indexing it to life expectancy to restore the original goal of Social Security, a lot of the solvency problems of the program could be solved without having to increase contributions in an unheard of fashion like other plans proposed (like the plan proposed by President Biden).

Greszler argues that retirement age can be extended further because older Americans can work longer due to increased life expectancy, better healthcare, and the ability to move away from physically demanding jobs and dismisses complaints that this pulls a bait and switch on Americans that have been promised a specific retirement age for decades and have contributed to the program expecting it to come to fruition.

This is not the only proposal to address the economic challenges facing the SSA. Experts also point out that some changes to inflation indexes are needed. While raising the retirement age for Social Security is a crucial part of the process, it would only address 20% to 30% of the program’s deficiencies so the need for other complimentary policies that would help the program thrive and become long lasting are still needed.