Actuaries Urge Immediate Action to Save Social Security Benefits
The American Association of Actuaries today held a press conference urging immediate action to delay or prevent the complete collapse of the Social Security retirement system.
The Academy made three proposals for boosting the strength of the Social Security retirement system:
1. The age at which full benefits could be received is raised to 67 for all workers born in 1949 or later. This would reduce the expected deficit by 10%.
2. Increase the full benefits age to 67 immediately then increase it by a month every two years until it hit 70. This would eliminate 35% of the expected long-range deficit.
3. Increase the schedule for full benefits by two months every year until age 70, eliminating half the long-range deficit, the academy said.
I find it interesting that none of the actuarial proposals include increasing the minimum retirement age from 62, where it is now. The actuaries probably understand that any such proposal would be ignored as politically unacceptable. Studies show that 50% of retirees opt to begin receiving Social Security benefits at age 62 (even though this is also a financial mistake for many.) A high percentage of folks in that age group vote, so no Congressman is going risk a voter backlash by delaying their retirement start date options.
This raises the question of whether increasing the full retirement age as proposed would cause even more retirees to begin benefits at 62 and, if so, how that would affect the actuarial calculations. Either way, those of us in our fifties need to understand that something along these lines is going to be implemented, probably shortly after this fall’s election cycle is complete. We need to make this knowledge part of our financial plan. The Social Security Administration has recently made it easier to estimate your retirement benefits.
I will be anxious to see if the Academy comes forth with similar proposals for Medicare, which is actually in even worse shape than is Social Security.