This week’s midterm elections didn’t bring the massive red wave many expected, but it seems likely Republicans will control the U.S. House when all the votes are counted, and they are still in play for the Senate. When the GOP does take control of at least part of Congress, many Americans will keep an eye on what they plan to do about Social Security.
A plan released over the summer by the Republican Study Committee, titled “Blueprint to Save America,” proposes realigning the Social Security full retirement age to account for increases in life expectancy since the program was first established more than 80 years ago.
As noted in the RSC plan, the average life expectancy for men reaching 65 increased from 77.7 years in 1940 to 82.9 years in 2016. For women, the average life expectancy increased from 79.7 years to nearly 85.5.
Linking full retirement age to longer life expectancies means the FRA for Social Security would increase to age 70 from the current FRA of 66 and 67 years old, CBS News reported. The full retirement age is when you can collect full Social Security benefits. Claiming them earlier means you will get a smaller monthly payment.
Those who support raising the FRA argue that doing so will help strengthen and save Social Security in the face of funding shortfalls. Under current law, the Social Security trust fund will become insolvent in 2035. When that happens, Social Security taxes paid by employers and employees are expected to cover only about 78% of the benefits in ensuing years, as GOBankingRates reported in October.
U.S. Rep. Steve Scalise (R-La.), the second-highest ranking House Republican, said the GOP wants to help save a program that is likely to run out of funds by the middle of next decade.
“It’s a mischaracterization to say the GOP plans to ‘cut’ the programs,” Scalise recently said on “Fox News Sunday.” “That is not something we have proposed. We have proposed strengthening and shoring up Medicare and Social Security.”
U.S. Rep. Jason Smith (R-Mo.), the ranking member of the House Budget Committee, told Bloomberg Government that Republicans will focus on “protecting and preserving” Social Security and Medicare.
But many Democrats and other critics say the RSC plan amounts to privatizing Social Security and threatening the country’s main retirement safety net.
“House Republicans are openly threatening to cause an economic catastrophe in order to realize their obsession with slashing Medicare and Social Security,” Henry Connelly, a Pelosi spokesman, said in a statement last month to Bloomberg Government.
As CBS News noted, while it might be true that Americans are living longer than in earlier generations, they are also retiring earlier than what you might normally expect.
A July 2022 report from Gallup found that the average retirement age among retirees is 61 — five years earlier than the average expected retirement age among nonretirees of 66. Other estimates put the average retirement age a bit higher. The Center for Retirement Research at Boston College estimates that the average retirement age in 2021 was 65 for men and 62 for women, Forbes reported.
No matter the true number, millions of Americans who depend on Social Security to pay basic expenses will sacrifice a lot of money if the full retirement age is raised. Those who wait until an FRA of 70 years old will miss out on three years of benefits compared with current retirees, CBS News pointed out. Those who opt to claim benefits earlier will see a permanent reduction in benefits. Retiring three years earlier than the full retirement age typically means a 20% decline in monthly benefits, the SSA estimates.
“That means that for even those people who work to age 70, you never catch up with the cut in benefits,” Nancy Altman, president of Social Security Works, told CBS News. “It particularly hurts those in low-income, physically demanding jobs. Most people don’t even work to their full retirement age, much less 70. This would add to insecurity and it would add to the retirement income crisis.”
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