A bipartisan group of senators are launching an effort aimed at encouraging Americans to avoid claiming Social Security benefits early, while some lawmakers want to push the retirement age even higher.
Some lawmakers want to increase the age for collecting Social Security benefits
The trust funds that support the Social Security Administration are projected to become depleted in 2034. Last year, the agency said when that occurs, the government will only be able to provide 78% of the promised benefits CNBC reported.
Lawmakers are facing the challenge of trying to keep Social Security solvent. There are only a few options available: Increasing taxes on benefits, raising payroll taxes, or increasing the retirement age – even a combination of all three.
Another choice lawmakers could have could be to raise the initial age for eligibility, which now stands at 62, as well as the highest age for delaying benefits, or decreasing the earning benefits that now come at age 70.
Republican presidential candidate and former ambassador to the United Nations Nikki Haley is one politician that is advocating raising the retirement age as a way to ensure that Social Security and Medicare benefits will remain solvent by the time Americans who are currently in their 20s reach their senior years, CNN reported.
“What you would do is, for those in their 20s coming into the system, we would change the retirement age so that it matches life expectancy,” Haley told Fox News during an interview.
However, Haley’s argument is one of the reasons Social Security already raised the full retirement age from 65 to 67 in 1983, when the program was facing insolvency, CNBC reports. Some experts say doing so was a “big failure” as the adoption of 401(k) plans, which were viewed as a way to supplement or replace Social Security, failed to deliver on its promise.
Critics say life expectancy is dropping, therefore Social Security ages should not increase
After years of increases in life expectancy, in recent years, the numbers have been decreasing in the United States.
Last August, the Centers for Disease Control and Prevention (CDC) reported that life expectancy at birth in the United States had declined by nearly a year from 2020 to 2021, dropping to 76.1 years. It is the lowest level since 1996. Life expectancy for men dropped to 73.2 years, while women dipped to 79.1 years.
Considering the above numbers, if a male were to wait until age 70 to collect Social Security, he would only collect benefits for roughly 3.2 years before death.
This is one reason some Americans are taking benefits at age 62. The reasoning is that, even though they are receiving less money by filing early, they receive benefits longer and collect more money overall.
For those born in 1937 and prior, the “normal retirement age” is 65. From 1938-1942, the normal retirement age is 65 and a number of months.
For those born between 1943-1954, the “full retirement age” is 66, it goes to 66, and a number of months for those born between 1955-1959 and for those born in 1960 or later, the full retirement age is 67, according to SSA.
Senate wants Social Security to make benefits easier to understand and encourage seniors from filing too soon and losing money
A bipartisan group of senators has launched an effort to help Americans make better decisions when it comes to claiming their Social Security benefits.
The senators believe many Americans are claiming benefits too early – when first eligible at age 62 – and settling for significantly reduced benefits rather than holding out for full benefits at “full retirement age.”
Taking benefits early at age 62 can reduce payments by up to 30 percent, according to AARP.
However, the opposite is also true. Waiting to receive benefits at age 70 – the “maximum benefits age” – benefits will be increased by roughly 32 percent (132% of the full benefits).
The Senators are also recommending changes to the wording the Social Security Administration uses regarding benefits to make them easier to understand, Yahoo reports. The Senators say there is a battery of confusing nomenclature such as “early eligibility age”, “full retirement age,” to “delayed retirement credits.”
Instead, the lawmaker suggests wording be changed to more easily understood terms such as: “Minimum benefit age”, “standard benefit age,” and “maximum benefit age.”
