The history of the right to retirement in the United States is inexorably linked to the establishment and evolution of the Social Security system. Since its conception, this great umbrella of benefits for retirees, disabled people and survivors of beneficiaries, has undergone great changes, especially in the particular of the ages at which beneficiaries can start claiming payments.
Since the enactment of the Social Security Act in 1935, by President Franklin D. Roosevelt, the standard retirement age was set at 65 years, but it must be understood that it was a time when life expectancy was significantly lower than it is today, and the average American lived only 61 years.
For several decades, the retirement age remained unchanged. However, in the 1960s and 1970s, life expectancy began to gradually increase, as did concerns about the long-term sustainability of the Social Security program.
By the 1980s, demographic trends already showed an aging population with an increasing number of retirees, which put pressure on the system and, today, the consequences of that are beginning to be seen.
1983 Amendments: Gradual Increase in the Retirement Age
The 1983 Amendments to Social Security introduced changes that generated rejection and controversy at the time, especially for the gradual increase in the retirement age. Under these amendments, the ARF would slowly increase from 65 to 67 over a 22-year period, affecting people born in 1938 and later.
This change was aimed at addressing the increased life expectancy and ensuring the solvency of the program. Again, there are still concerns about sustainability, since the trustees of Social Security have warned on several occasions that the program could be bankrupt by 2033, as we have already reported in other articles like this one.
Currently, the full retirement age in the US varies depending on the year of birth:
- For those born in 1937 or earlier, the FRA is still 65.
- For those born between 1943 and 1954, the FRA is 66.
- For those born in 1960 or later, the FRA is 67.
Early retirement benefits can still be claimed from the age of 62, but with a sharp and by no means insignificant permanent reduction in monthly benefits. Conversely, delaying retirement beyond the FRA may result in increased benefits, up to age 70.
Proposal to Increase the Retirement Age: You Will Have to Wait More Years
It is not to be ignored that life expectancies, both in the United States and in other developed countries, continue to increase thanks to health systems, medical science, and healthy living behaviors that are gaining more and more ground.
With the continued increases in life expectancy and the aging of the baby boom generation, there are ongoing discussions about new adjustments to the retirement age. Policymakers are considering options such as gradually increasing the FRA to 69 or even 70 to maintain the financial health of the system.
So that you don’t feel alone, other countries are in the same predicament. Countries such as Denmark, Estonia, France, Italy, the Netherlands, Sweden, Spain, and even the United Kingdom. In several of them, the FRA has been taken until the age of 70, with the complaint of social sectors and workers in general, who see how they will have to wait many more years to be able to rest from work.
A proposal by a large and influential group of Republicans that seeks to raise the Social Security retirement age for future retirees, and at the same time restructure the Medicare program, is being discussed in the House of Representatives.
It calls for “modest adjustments” to the retirement age for future retirees, taking into account the increase in life expectancy, and at the same time would force the Social Security Administration (SSA) to reduce benefits for higher-income beneficiaries, emphasizing that these changes should not be applied all at once, but gradually over numerous years.
Medicare on Its Way to Becoming Financially Insolvent
The new budget also envisions turning Medicare into a “premium support model,” in line with a proposal that former Republican House Speaker Paul Ryan had garnered support for. The entire Medicare program could then be turned into one that competes in the private market, and beneficiaries would receive subsidies to purchase the policies they prefer from private providers.
Experts have projected that Medicare will become insolvent by 2028, and Social Security (as mentioned above) by 2033. After that, if concrete solutions are not reached, the benefits will be necessarily reduced.