Social Security Solvency: Raised Retirement Age More Likely as Congress Fails to Compromise
There has been no shortage of partisan bickering over Social Security in recent weeks, as Republicans and Democrats have traded barbs over which party wants to fix the troubled program and which wants to undermine it.
The rhetoric got ratcheted up last week when a pair of Republican lawmakers accused Biden administration officials of being dishonest about the Social Security debate.
During a Senate Finance Committee hearing, U.S. Sen. Bill Cassidy (R-La.) accused Treasury Secretary Janet Yellen of lying about President Joe Biden’s willingness to work with lawmakers on Social Security reform, Reuters reported.
That followed a similar exchange between Sen. Mitt Romney (R-Utah) and Shalanda Young, director of the White House Office of Management and Budget (OMB), in discussions centering on Biden’s fiscal 2024 budget proposal. In a separate hearing, Romney said Young was “simply wrong” and “not honest” to suggest that current members of Congress want to cut Social Security and Medicare.
With so much animus between the political parties, it’s hard to see any hope of bipartisan Social Security reform. The only solution with even a whiff of bipartisan support is a proposal to raise the full retirement age for Social Security benefits.
That proposal, announced last month, is being pushed by Cassidy, the Louisiana Republican, and Sen. Angus King, a Maine independent who caucuses with Democrats. The two are leading a group of legislators that aim to raise the full retirement age to 70 from 67.
Raising the FRA is seen as one way to lessen the impact of the coming insolvency of Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund, which finances about 20% to 25% of Social Security benefits. The fund is expected to run out of money by the middle of the next decade, meaning Social Security will have to rely solely on payroll taxes for funding.
Raising the FRA might convince more seniors to wait an extra couple of years to start claiming Social Security benefits so they can get bigger monthly payments. With fewer people signing up for benefits before turning 70, the Social Security Administration will have fewer benefits to pay out.
Raising the full retirement age has bipartisan support among registered voters, though not necessarily raising it all the way to age 70. A 2022 survey of more than 2,500 registered voters, conducted by the University of Maryland’s Program for Public Consultation, found that 75% of respondents favored gradually raising the retirement age from 67 to 68, a move that would eliminate an estimated 14% of the funding shortfall. Support was evenly split between Republicans (75%) and Democrats (76%).
Other solutions with bipartisan support among voters include making more wages subject to the Social Security payroll tax, increasing Social Security withholding, and reducing benefits for high earners.
But for now, much of the focus is on whether to raise the full retirement age. Not everyone supports the idea. Social Security advocates and many lawmakers have pushed back against the proposal because of the potential financial impact it would have on seniors who are already struggling to make ends meet.
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Raising the FRA to age 70 “significantly cuts benefits for anyone retiring before their new full retirement age,” according to the National Committee to Preserve Social Security and Medicare (NCPSSM), a nonprofit advocacy group.
But spokespersons for Cassidy and King have countered that their plan doesn’t include any cuts for Americans currently receiving Social Security benefits and that many will receive additional benefits.
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