Plenty of People Would Really Be Hurt By Raising the Retirement Age for Social Security to 69 or 70
October 16, 2015
The Fiscal Times - Social Security’s trust
fund reserves are expected to be depleted by 2037, and fixing the
program is the one issue many of the presidential candidates from both
parties agree on.
But just how we should address Social Security’s
impending shortfall is a cause of fierce debate. Several Republican
candidates want to raise the retirement age for the program. Jeb Bush
wants to boost the full retirement age to as high as 70, while rival
Chris Christie is suggesting hiking the threshold to 69.
In some
ways, such a change wouldn’t be so different from the system that’s now
in place. Social Security’s current full retirement age stands at 66
years old for people born between 1943 to 1954, and they can claim for
early benefits as soon as they turn 62 – although they’ll take a haircut
of as much as 30 percent on their payments.
While the GOP
candidates would push the full retirement age higher, Americans would
still be able to claim early benefits. So who would really be hurt by a
later retirement age? Plenty of people, it turns out.
Americans
are living longer, which means every worker is likely to have longer
retirement, and therefore potentially receive less from Social Security
if they can’t receive their full benefits until they turn 69 or 70. In
1940, the typical American man only lived 12.7 years past his 65th
birthday. By 1990, men turning 65 could expect another 15.3 years of
life.
Yet there are certain groups who would feel the pain of a delayed full retirement age more than others:
Workers with physically demanding jobs: Americans
who are employed in tough blue-collar jobs are 55 percent more likely
to file for early retirement benefits at 62, according to a
2014 study
from the U.S. Government Accountability Office. These jobs can be found
in some of the country’s largest industries, such as construction and
farming, the report noted.
Given
their tough jobs, it's less likely that some of these workers will be
able to make it to the higher age limit for full retirement. That means
more blue-collar workers will be faced with lower Social Security
payments throughout their retirement years. If they can hold out until
69 or 70, some may be suffering health ailments from the impact on their
bodies from additional years spent in their physically demanding jobs.
The non-college educated: Lacking
a college degree is another indicator that an American is more likely
to file for early retirement benefits, the GAO found. Given that only
one-third of Americans have a bachelor’s degree, this applies to the
majority of working adults in the country.
Americans without college
degrees not only have shorter life expectancies than their more educated
counterparts, they also earn less on average. A higher retirement age
would hit this group hard, given that they are more likely to rely on
Social Security for the bulk of their retirement income.
Those who don’t think they’ll live to 75:
These Americans are making what to them seems like a good financial
decision. People who don’t think they’ll live to celebrate their
75th birthdays are more likely to file for early retirement benefits,
the GAO found. There’s some evidence that they are making a logical
decision, given that this group has a higher death rate than Americans
who wait for their full retirement age.
Still,
there’s always the financial risk that they’ll live longer than they
expect, which means more years on a reduced income. And if the
retirement age is raised, that could spell even more financial trouble
for people dealing with ill health or chronic ailments.
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