Golden Years

Retirement and other benefits of Social Security are widely considered a “third rail” in American politics — topics so charged that most politicians avoid them altogether. It may be time to face up to the challenge. The good news is life expectancy is increasing, buoyed by advances in medical technology, access to health care and overall economic well-being. But it’s also changing the delicate ratio between the proportion of Americans working and paying into the program and those who are now living on its payouts. For more than four decades, workers retiring at age 67 have been eligible to receive full benefits, an average of about $1,800 a month. Is it time to raise the retirement age to protect Social Security? Or would that harm the very workers the program exists to protect? —NATALIA GALICZA

It’s only fair

Americans value Social Security, and don’t want to mess with it. A Quinnipiac University national poll published last year found that 78 percent oppose raising the retirement age from 67 to 70. The idea is unpopular among both Democrats and Republicans. This is particularly true among lower-income or blue-collar workers, who would be less likely to enjoy any projected boons.

Raising the age threshold would reduce benefits across the board by about 20 percent, according to the Center on Budget and Policy Priorities, a nonpartisan research institute. Under the current structure, most workers retire before 67, and as early as 62, accepting reduced benefits simply because they are not willing or able to continue working — often due to health concerns, injury or caregiving responsibilities. Raising the age would deepen those cuts, effectively punishing those who have no other choice.

Further, the negative impacts of raising the retirement age would disproportionately fall upon lower-income workers and people of color — who are most likely to rely on Social Security. One reason is that income level drastically affects life expectancy. Studies show that the wealthiest men in America can live 15 years longer than their poor counterparts; the gap is 10 years among women. Similar differences arise along racial lines, meaning that American Indians and Alaska Native peoples as well as Black Americans typically have fewer years to enjoy the benefits they spent their working lives accruing.

There is a straightforward alternative to buttress retirement funding, which is to increase the amount of money that goes into the pot each year by raising the Social Security tax limit from its current ceiling of $168,600. Simply put, this would ask for more from higher-income taxpayers. “(Americans) want their government to strengthen (Social Security) and expand it — not to cut it, contract it or gut its customer service,” Social Security Administration Commissioner Martin O’Malley said at a House Ways and Means Committee hearing in March. “For those who would advocate raising the age, I think we have to be mindful of people who do hard work their whole lives, and die sooner.”

Time for a reality check

Social security is in crisis. The program responsible for providing retirees with their monthly payments is facing a deficit that may very soon come to a head. That means a sustainable approach to administering retirement benefits is needed now more than ever. Raising the age threshold would strengthen Social Security by conserving financial resources, ensuring the system can endure as the American population grows older.

The Social Security Administration’s Old-Age, Survivors, and Disability Insurance program is fueled by payroll taxes. Employees and employers each contribute 6.2 percent of each paycheck, for a total of 12.4 percent. That money is then pooled among workers nationwide to fund benefits for all retired Americans. But the workforce is shrinking as the population ages — largely due to a declining birth rate and rising life expectancy. One in five Americans will reach retirement age by 2030. Three years after that, according to a May report by the administration’s board of trustees, the funds that pay for the national retirement program will run out.

A congressional caucus known as the Republican Study Committee released a budget proposal in March for fiscal year 2025 that advocated for raising the retirement age in order to avoid cutting benefits for future retirees. Their proposal doesn’t specify by how much, but accounting for life expectancy increases could bring the new age to around 70 years old. Perhaps that would be more grounded in reality. “No one should have to work longer than they want to,” writes Larry Fink, CEO of BlackRock, for The New York Times. “But I do think it’s a bit crazy that our anchor idea for the right retirement age … originates from the time of the Ottoman Empire.”

Apart from extending the availability of Social Security funds, raising the retirement age would boost the economy as a whole. A study published by the National Bureau of Economic Research in 2016 found that the average American between ages 55 and 69 is capable of working at least an extra 2.5 years. Those additional years of work, for those who wish to use them, can add to the individual’s wealth and the average retirement income while shoring up the nation’s diminishing workforce.

This story appears in the October 2024 issue of Deseret Magazine . Learn more about how to subscribe .