Proposal to raise social security age under fire – Insurance news

On December 23, 2024By Littum

Photo illustration showing social security card and money behind a large "62" is crossed out. Proposal-to-raise-the-social-security-age-under-fire

Raising the retirement age is just another way of saying, “Cut Social Security,” the CEO of a Social Security organization said in the wake of a congressman’s recent proposal to push back the full retirement age.

“That’s a 7% benefit reduction for every year that age increases, even if you work until age 70 or older. That’s thousands of dollars out of pocket for people who live paycheck to paycheck and rely on their earned benefits to to pay for food, medicine and their heating bills, Alex Lawson, executive director of Social Security Works, told InsuranceNewsNet.

Last week, Congressman Mark Alford, R-Mo., proposed raising the retirement age to help reduce the costs of the federal government. The congressman told Fox News that Republican members of Congress recently sat down with Elon Musk and Vivek Ramaswamy, who will lead the unofficial Department of Government Efficiency under President-elect Donald Trump, to explore ways to “cut the budget.”

“I think there’s a way as people live longer, they retire later, and so on the upside we can move the retirement age back a little bit,” Alford said.

The current full retirement age is 67 for those born in 1960 or later, and is the earliest age at which workers can begin receiving Social Security benefits without any financial penalty for claiming early.

The effect of an increase in the retirement age

Lawson objected to Alford’s suggestion that raising the retirement age would cut into the federal budget.

“Rep. Alford justifies this by saying that ‘people are living longer,’ but most Americans aren’t. He also justifies it by pointing to the federal debt, but Social Security doesn’t add a dime to the deficit as President Ronald Reagan explained a long time ago.

“We are the richest nation in the history of the world. It is completely unnecessary, and deeply immoral, to force nurses and firefighters to work well into their prime years. Instead, it is long overdue for the richest Americans, like Elon Musk, to contribute their fair share to social security.”

Alford’s office did not respond to a request for comment from InsuranceNewsNet.

The congressman’s announcement is not the first time that Republicans have proposed raising the retirement age.

The GOP proposal included cuts to Social Security

In March, the Republican Investigative Committee released its fiscal year 2025 budget proposal, which included cuts to Social Security.

A policy that has continuously been included in the RSC’s budget proposal for years is an increase to Social Security’s full retirement age. The RSC plan would push the full retirement age to 69, leading to benefits for a large majority of Americans.

According to one Center for American Progress analysis, a full retirement age of 69 would cut benefits for all new retirees between about 12.5% and 14.3% when fully phased in. Additionally, it would cost an average-income retiree earning $70,000 in 2022 and turning 62 in 2034 thousands of dollars each year.

The size of the benefit reduction compared to receiving full benefits will depend on the age at which someone claims Social Security, the analysis said.

For example, a person claiming Social Security at 62 under current law is subject to a maximum penalty of 30% on monthly benefits to compensate for the fact that the person would receive payments months or even years before their peers in the same birth cohort who may decide to wait to receive benefits. Raising the full retirement age to 69 would raise this maximum penalty from 30% to 39%, reducing benefits by nearly 13%.

The Center for American Progress said that because of the timing of the phase-in, those who turn 62 before 2027 would actually be protected from the RSC plan’s benefits, but everyone else would suffer. Nearly 3 in 4 Americans — a total of more than 245 million people — would be subject to the increase in the full retirement age. The center said both the total number and the proportion of affected Americans would only increase as time goes on.

Susan Rupe is the managing editor of InsuranceNewsNet. She previously served as director of communications for an insurance agent association and was an award-winning newspaper reporter and editor. Contact her at (email protected).