In recent months, large numbers of elderly people have expressed their misgivings and justified concern about what is coming for Social Security, and well, their anguish is totally understandable.
Advocacy groups for older adults have been watching with concern new ideas, possible decreases in payments and even a possible funding crisis, while a new retirement age is expected to be applied in the United States, so it seems that everything is about to change for older people, according to the latest reports.
The proposal that is on the table, is written by experts in the area of retirements and related fields and, if approved, it would take one more year of waiting for the large group of future retirees to begin receiving their Social Security payments, there is a possibility of avoiding the bankruptcy of Social Security and, at the same time, that there is an increase in payroll income and income taxes through gradual increases in the early retirement age, 62 years, the full retirement age, 67 years and the late retirement age, 70 years, these increases would be the result of longer and more intense working hours.
Changing the Retirement Age in the United States
In 1983, Congress approved a law that progressively increased the retirement age to be a beneficiary of all Social Security benefits. Early retirement benefits will continue to be available at age 62, but they will be reduced further.
Despite being one of the most competent programs in the United States, Social Security faces long-term financial complications, since its expenses grow faster than its income, although living longer is, in general, a positive thing, as the baby boomer generation retires in the next 20 years, Social Security will face more significant expenses, as a result of said trend.
As each generation of retirees is financed with current workers who expect to receive their own benefits upon retirement, Social Security is especially a sharing system, the more money Social Security receives in contributions, the more money it takes to provide benefits, professions that are physically demanding and workers with poor payments have a lower life expectancy than the average, so raising the retirement age could work so that there are disproportionate reductions in benefits for them.
A certain age may also be out of reach for some employees in physically severe jobs, however, to counteract these impacts, certain measures can be taken, such as variations to the disability regulations, which will give help to some employees who become unable to perform their tasks after a certain age.
Retirement Age Increases in the US Follow Global Tendencies
The reasons for increasing the retirement age vary from one country to another, but generally include factors such as increasing life expectancy, decreasing birth rate and the need to ensure the sustainability of pension systems.
Three examples of countries that have raised the retirement age in recent years:
- Uruguay: In 2023, a reform was approved that raises the legal retirement age from 60 to 65 years gradually for those born after 1973. The calculation of the basic salary for the pension was also changed.
- Italy: As of 2023, the retirement age was set at 67 for men and women. However, there are early retirement options with specific requirements.
- Denmark: The retirement age was gradually increased to 67 in 2022, with the possibility of retiring at 64 for those who have contributed more.
- In France, the legal retirement age has also increased in recent years. As of September 1, 2023:
- The legal retirement age was gradually increased from 62 to 64 for people born after 1962
- The full-rate retirement age (the one at which 100% of the pension is received) remains 67 years.
How would this affect me as a soon-to-be retiree?
Most of the reforms are carried out progressively, according to one plan, the FRA can be increased by one month every two years to reflect the higher life expectancy of US citizens, another suggests increasing Social Security benefits gradually, but more drastically, to further reduce future expenses.
Regardless of how it is implemented, raising the Social Security full retirement age makes sense, as it reduces the program’s expenses to alleviate the financial burden of future generations and aligns with the prolongation of the life expectancy of Americans.