Retirement age debate: Retire at 68? 70? 73?

Posted Aug. 2, 2010 at 6:29 a.m.

Of all the flash points in the debate over Social Security, few generate as much heat as raising the retirement age.

Today, the so-called normal or full retirement age is 66, up from 65 a decade ago. It is scheduled to increase by two months a year starting in 2017 until it reaches 67 in 2022. Meanwhile, 62 remains the age at which those who retire early can collect a percentage of their full benefits.

But many budget and debt experts recommend that the retirement age be raised further.

Why? Because Americans are living longer and spending more years in retirement than they did when Social Security was established.

“The full retirement age would have to increase to 73 for adults to have the same expected years of remaining life in retirement today as in 1940,” Urban Institute senior research associate Melissa Favreault and senior fellow Richard Johnson note in their research.

Most proposals being discussed would raise the full retirement age to 68, 69 or 70. Some would also increase the early-retirement age.

Opponents of increasing the age contend, among other things, that while people are living longer, they are also working longer, producing more and paying more into Social Security than earlier generations.

“When you look at the big picture, what really matters is how much we pay into the system, not whether we’re living longer,“ said Monique Morrissey, an economist at the Economic Policy Institute, in a report that contends that raising the retirement age is not the best solution.

In addition, they say, a retirement age hike would unfairly hurt workers in physically demanding jobs, those in poor health or in low-income groups whose life expectancy hasn’t gone up much. Many people over 65 would also be hurt, they say, since age discrimination can make it hard for seniors to secure jobs.

Proponents of raising the retirement age agree: Some people will get hurt.

“It’s wishful thinking to assume that we could raise the retirement age and protect everyone,“ Johnson said.

But they believe that shouldn’t prevent policymakers from putting the program on a more sound footing so long as steps are taken to protect groups who would be hurt by an increase.

They also note that the percentage of those workers has fallen in the past few decades as Americans in their 50s and 60s have become healthier, better educated and less likely to be in physically demanding jobs.

“Why have the tail wagging the dog?“ said pension expert Ron Gebhardtsbauer, who sits on the board of the American Academy of Actuaries and runs Penn State’s actuarial science program.

Those who would be unduly disadvantaged by a higher retirement age can be compensated in other ways, proponents say. Specifically, access to disability and Supplemental Security Income benefits could be expanded. Or low-income workers could be exempted from an increase in the early retirement age.

As for older workers’ job prospects, it’s true they have a hard time finding work today. But changes to the retirement age would affect people who retire many years from now.

“By then younger people will make up a much smaller share of the workforce, and there may be far more jobs available for seniors,“ wrote retirement expert Howard Gleckman, editor of the blog TaxVox.

Raising the retirement age could help keep Social Security solvent for decades to come. The question is how much.

The answer: It depends on how the change is structured.

For example, an increase to 68 for today’s 44-year olds (those turning 62 in 2028) “would not significantly extend the trust fund exhaustion date,“ according to the Congressional Budget Office.

If, however, the retirement age rose to 68 for today’s 50-year-olds (those turning 62 in 2022), that would reduce the program’s 75-year funding gap by 29%, according to estimates from Social Security’s actuaries.

Of course, any efforts to protect groups unfairly disadvantaged by an increased retirement age would reduce those savings.

In any case, a retirement age change would likely be part of a larger package of reforms to the program.

Opponents of raising the retirement age say it amounts to an across-the-board cut in benefits.

That is generally true if workers leave the workforce before the full retirement age.

For example, if a future retiree works an extra year for every year the retirement age is increased, “he should be getting roughly the same amount of retirement security,“ said Frank Todisco, a senior pension fellow at the American Academy of Actuaries.

Say a worker born in 1980 plans to retire at 67 and then the retirement age is raised to 68. If he logs one more year on the job, he should get Social Security benefits roughly equivalent to what he’d get under the current system.

But if he retires at 67 anyway, “then he’d get less under the new system than the current one,“ Todisco said.

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  1. et Aug. 2, 2010 at 8:30 a.m.


  2. DBX Aug. 2, 2010 at 8:40 a.m.

    So raising the retirement age for the 44 year olds — the “Baby Busters” — makes no difference, but raising it for 50 year olds, the tail end of the Baby Boom, makes a huge one.

    This sounds ever more like a short-term problem, due to the combination of the huge number of Baby Boom retirees and massive and irresponsible borrowing by the federal government against the Social Security trust fund. By 2040, when the Baby Boomers are mostly gone, we won’t be worried about Social Security as it will be just fine if we quit looting the trust fund. Instead, we’ll have been bankrupted by Medicare, defense, energy costs and agriculture subsidies if we don’t do something about them. So, more and more, I’m inclined to favor spending cuts in other programs and a tax increase for Social Security as a way of getting through what looks like a temporary problem more than a permanent one. Let’s look at the real problems and not manufacture one with Social Security, which, after all, is the slowest-growing of the major government spending programs.

  3. Alex Aug. 2, 2010 at 9:14 a.m.

    This is silly. Well to do “Experts” are recommending that workers retire at 73. This simply means that the average person will work from the age of 15 until the age of 73 (a long 58 years), then die a decade later at 83 (if they take care of themselves). Whatever happened to enjoying one’s retirement. Ten years is way to short to enjoy the golden years.

  4. Lisa Barrett Aug. 2, 2010 at 9:19 a.m.

    I agree with Alex and add this: for starters, tax TOTAL wages rather than stopping at the $103,000 (last I checked) cap.

  5. Social "Security" Aug. 2, 2010 at 9:36 a.m.

    “Ten years is way to short to enjoy the golden years.” You left off “on the taxpayers nickel”

    Raise retirement age
    SS tax full income, no cap
    Pay out SS benfits only on need based … if you have money you don’t need “welfare” to buy a boat you old goat, same as before retirement

  6. lmwilker Aug. 2, 2010 at 10:26 a.m.

    “Ten years is way to short to enjoy the golden years.” You left off “on the taxpayers nickel”

    No. Not the taxpayers nickel. By the sweat and industry of my own brow. If I had chosed to be a stay-at-home mom and never paid into the system and I wouldn’t get anything out of the system aside from a share of my spouse’s social security. Instead I have worked and paid into the system since I was 15 years old. Eliminating the salary cap would eliminate all of the so-called problems.

    My mother worked in factories all her life. The last time I spoke to her in 2003 she spoke about how excited she was because in 4 short years she would be 62 and was going to retire. Three months later she was dead from a cancer her doctor said was triggered by exposure to industrial toxins.
    I wonder if the idiot in the artle claiming that Americans now work easier. less physically demanding jobs is the same idiot who keeps asseting that illegal immigrants are here because there are jobs Americans refuse to do.

  7. Jeeper Aug. 2, 2010 at 10:30 a.m.

    Screw that noise. My goal is retiring at 62.

  8. Wayne Aug. 2, 2010 at 10:35 a.m.

    I knew it. This just means my fear that one day they’ll find me slumped over my desk dead will surely come to pass. Here’s to never retiring!

  9. Adolph Aug. 2, 2010 at 10:40 a.m.

    Most aren’t going to be able to retire at all.

  10. J News Aug. 2, 2010 at 10:46 a.m.

    @lmwilker: Yes — on the taxpayer’s nickel. All your contributions to social security and medicare are gone. They don’t exist. You trusted the government with your savings and they failed you by spending your retirement savings on defeating communism/poverty/bank failures. Going forward, your social security payments will be made by redistributing wealth from people who do work (ie, me), to people who don’t work (ie, you).

    Removing the cap is an even greater insult as it is a huge massive tax increase on me, to redistribute even more of my wealth to people who refuse to work. Maybe I just won’t work so hard, and then where will the money be for your social security checks?

  11. Joebin Aug. 2, 2010 at 10:46 a.m.

    old people are so lazy. Do they really need +25 years to sit on a porch?

  12. Mike S. Aug. 2, 2010 at 10:50 a.m.

    Raise the retirment age to 70 and the early retirment age to 65. They also need to eliminate the cap. However, I feel that if you paid into Social Security, you should get something out of it.

    You can not depend on Social Security as your only source of income when you retire. If you have the money saved up to retire earlier, that’s fine. But, as far as full Social Security payments go, it should be 70. People are living longer and costs are going up, especially health care. It is not your God given right to retire, let alone retire and have the government support you.

    And if you think your 70’s, and 80’s are your golden years, I think you will be disappointed.

  13. RegularGuy Aug. 2, 2010 at 12:22 pm

    Now if our intrusive government really wants to help, it will eliminate age discrimination which today effectively prevents the over-50 crowd from being fully employed.

  14. Mark Aug. 2, 2010 at 12:30 pm

    It’s not the government supporting anyone! It’s me supporting myself. It’s my taxes that will later be going to me when I retire. People who have contributed to Social Security deserve the right to retire because they have paid into it for decades. Anyone who says it’s the government supporting us and allowing us the priveledge to retire is uneducated clearly.

  15. J News Aug. 2, 2010 at 12:36 pm

    @Mark: Please keep up. The government spends your taxes today for the cause of the day — defeating terrorism, defeating communism, eliminating poverty, tax cuts for the rich, that sort of stuff. You may have paid in for decades, but the money isn’t there. It does not exist. It’s already been spent. The only thing that remains are an endless stream of IOUs and failed policies of a generation who thought tomorrow would be a brighter day.

    Social Security is a ponzi scheme funded by redistribution of wealth of those who work to those who don’t. You can wave your hands and talk about what was *supposed* to have happened, but it didn’t work out that way. Bernie Madoff made a lot of wild promises, too.

  16. wbrandy Aug. 2, 2010 at 12:37 pm

    If we need to up the retirement age that’s fine. Then we also need to up the retirement age for the Federal Workers pensions that don’t put a penny into it, this is a huge drain on the Federal budget. No more retiring in their fifties and then double dipping at another job. This also should pertain to police officers and firemen they too can work longer like everyone else.
    If they want to discontinue Social Security entirely I would be happy with my money back with no interest. I figure I already have dropped in about $180,000 in my career. I find it hard to believe we can’t keep Social Security going when everyone that’s working drops in 12% of their income between the employee and the employer’s fees

  17. Southernsider Aug. 2, 2010 at 12:51 pm

    Look for a “mysterious”, drug resistant disease epidemic that would wipe out a quarter of the over 65 population. It would open up jobs and ease the drain on social security and medicare.

  18. Shelley Morrison Aug. 2, 2010 at 1:52 pm

    Get this and get it now. TAKE THE CAP OFF. Anyone earning over $250,000 DOES NOT PAY INTO SOCIAL SECURITY BUT THEY CAN COLLECT ON IT. Want to make sure everyone gets their fair share, TAKE THE DAMN CAP OFF NOW!

  19. jjrg7 Aug. 2, 2010 at 2:56 pm

    Even though there is a cap on what people pay into social security, there is also a cap on what they can collect. Lots of people that have never worked get social security including stay at home spouses, disabled people, kids who’s parent dies before they turn 18, and immigrants that come to this country legally as a parent of a working immigrant that sponsors them to come over.

    Most people keep working longer because they need insurance. Now that we will have government health care that should be affordable to all, that will make people just want to retire earlier anyway. Maybe work part time or live off savings till the social security kicks in.

  20. RegularGuy Aug. 2, 2010 at 3:07 pm

    The posters who mentioned that SS is not a government handout are right on. Not only does the employee contribute to SS all their working life, but their employers contribute equal amounts. The SS fund is depleted because the government uses the revenue for other purposes. And the SS Administration is another bloated bureaucracy loaded with punch-clock paper pushers.

    If you want to get sense of how much federal workers DON’T do, just look at the DC Metro at 5:10pm. It is overcome by hoards of federal workers who ‘punch out’ at 5:01pm, just like they do every other work day. While you or I have to stay until the work is done, government employees (state and federal) have absolute immunity from even that extra minute.

  21. SharonD Aug. 2, 2010 at 3:59 pm

    JNews “You trusted the government with your savings…”

    Yeh, right. As if I had a choice. If I did, I would’ve opted out of SS the day I started working. Guess what: that option wasn’t available.

  22. Smitty Aug. 2, 2010 at 4:33 pm

    Social security was intended as a form of savings plan, not welfare. If that is what you want it to be, just say so. How ’bout telling all of the Baby Boomer retirees that they are now on welfare???

    A better way to save the system is to not allow people to collect who haven’t paid in. (I personally know of at least 10 people that are spouses of individuals that paid in to the system who are collecting IN ADDITION to their spouse even though they never paid into the system.)

    If you tax people for their full income and then means test, you are further diminishing the ability of the middle class to retire at all. I am 45 and have no dreams of retiring until at least 70 notwithstanding the fact that my husband and I both started working at 15 and have worked full time to the present. We sure could have used the additional $100,000 plus that we paid in that is allowing the Baby Boomers to retire at 62 and live to 90.

  23. Ray A. Aug. 2, 2010 at 4:54 pm

    Social Security was designed as a supplement. I understand that roughly an eighth of our income goes to this “benefit”, but let’s call it what it is, a societal tax for social engineering. It was ill conceived and poorly implemented.

  24. Brian Aug. 2, 2010 at 6:42 pm

    I’m sorry but I want to retire while I can enjoy it. Not at 72 years old. I agree 65 early retirement and 70 full retirement.

  25. Harold Aug. 2, 2010 at 8:20 pm

    I had to retype this a couple of times, my retired parents always taught me to say something nice or not at all. Every person has a right to retire and enjoy the remaining years they have left. I plan on spending time with my kids and grandchildren when its my turn, by the way I’m 50. If everyone wants to fix the problem raising the age continually is not the answer. Will it take higher taxes maybe, belly aching will not help. Should taxes be raised to cover anyones entire pay if they make over the current limit, of course they should. If I made 120,000 a year I wouldn’t belly ache too much or should anyone who makes 50,000 with 3 kids pay for them? By the way I plan on retiring when I’m 67, if I live that long.

  26. Zenith Aug. 3, 2010 at 8:14 a.m.

    I know people who are in their 50′, who work strenuous jobs. Their bodies will not hold up till they reach 70. I agree with taking off the caps. SS on all income. Social Security money has been used for what it was not originally intended for. That is a huge problem. If we lose Social Security, you will see miles of lines in soup kitchens, as that is all the majority of the elderly have. A lot of those people worked, as do a lot now, jobs with minimum wages. They could not save much money.Don’t blame the elderly, or call them lazy. This is not their fault. it is Washington’s fault.

  27. janett mathisen Aug. 9, 2010 at 12:35 pm

    I am in instructor. I teach the young and not so young. I have found that those in the 50’s and up do not retain the new material easily, are slow to complete assignment, slow to complete exams, and overal slow in absorbing and retaining material…

    The quality,quantity and timelines of work provided by much older folks will be reduced considerably when they are in their 60,s and 70’s. They are also prone to making more errors.

    Jobs available for the younger ones will be few and far apart as the jobs will still be filled by aging folks who are not producing to 100% capacity, take twice as long to complete a simple task than someone in their 50’s or younger.

    I have known people who retired in their late 60’s and 70’s, and never enjoyed their retirement because they died soon after retirement.

    Many of the older workers take a lot of time off for sick leave. This reduces productivity as well..

    The government has used our money we paid in for years, now they are broke, why not let the payers pay more now by extending their legal retirement age so they can keep on paying in more so the government can spend it for bail out reasons to those who screw up the system.