Washington, D.C. – The solvency of Social Security is once again in the spotlight, as recent Republican presidential debates draw attention to potential changes to the retirement age. With the Social Security Board of Trustees projecting that the program’s combined funds may run out in 2034, lawmakers are considering options to address the issue, including raising taxes, cutting benefits, or a combination of both.
During the Republican presidential debates, the possibility of raising the retirement age emerged as a topic of discussion. Republican candidate Nikki Haley emphasized the importance of keeping promises made to current beneficiaries while contemplating changes for future generations.
The retirement age has been raised before in response to similar solvency concerns. In 1983, legislation was passed to address the issue, which included a gradual increase in the full retirement age from 65 to 67. Although this change is still being implemented, the debate on potentially raising the retirement age once again may have significant implications for early claimants.
Currently, the full retirement age is when beneficiaries can receive 100% of their earned benefits. Those who claim earlier will have their monthly checks permanently reduced. On the other hand, those who delay claiming retirement benefits until they are 70 can receive up to an 8% boost in benefits for each year they wait past the full retirement age.
Despite the potential advantages of waiting until age 70, nearly 90% of today’s retirees opt for early claiming. Experts like Teresa Ghilarducci, an economics professor at The New School for Social Research, assert that waiting longer to collect Social Security would be the most financially beneficial option for the majority of people.
Experts suggest several strategies to encourage beneficiaries to delay claiming their benefits. One approach involves drawing from other income sources, such as retirement accounts, while postponing Social Security benefits. The Schwartz Center for Economic Policy Analysis at The New School proposes a “Social Security bridge option” that would allow workers to rely on their own savings until age 70, potentially increasing their Social Security benefits by up to $1,000 per month.
Another idea is to make annuities more accessible within employer-sponsored retirement plans, which provide a guaranteed stream of income during the delay period. Notably, less than 10% of retirement plans currently offer annuities, according to the Bipartisan Policy Center.
Additionally, the creation of a bridge benefit has been suggested to help workers with physically demanding jobs who cannot wait until full retirement age. This benefit, which would start at age 62 and gradually decrease until full retirement age, aims to lessen the cut in monthly income for early claimants.
Finally, experts propose improving the special minimum benefit provided by Social Security to individuals with low earnings. The value of this benefit has diminished over time, and suggestions for improvement include raising benefit levels or changing eligibility rules.
As discussions around the Social Security retirement age continue, it remains crucial for policymakers to strike a balance between ensuring the program’s solvency and protecting the retirement benefits of all Americans.