The debate over Social Security is back in the spotlight, and proposals to change the minimum retirement age are causing a great deal of controversy. A new proposal suggests raising the age from 62 to 70 as part of an effort to alleviate the Social Security Administration’s (SSA) budget deficit, which could reach critical levels by 2035. This change brings to light workers’ concerns, especially for those jobs that are physically demanding or low-income. Join us to find out what’s going on in the SSA offices.
Why do they want to change the retirement age?
It is not about changing, it is about increasing, that is, they want to reduce the economic costs that the SSA faces in terms of retirement. We explain it better, the so-called pension pot is on its last legs, and it is estimated that it could be empty by 2035, and this would cause nothing other than a fairly large drop in the money that our pensioners receive. By changing the retirement age, it is estimated that the sustainability of the system can be guaranteed but in the long term, because, as we now have more quality and more life expectancy, we need the economic proposal to be at the same level.
Does raising the retirement age mean anything?
Well, of course, it would mean that workers would have to wait until they are 70 to receive full social security benefits (a full pension, as we would say). Currently, workers can retire (early) at the age of 62, but the amount is reduced by up to 35% if they retire earlier. The current retirement age is almost 67, so the change would mean that our elders would have to contribute for three more years to be able to achieve their longed-for retirement (which, on the other hand, belongs to them).
On the other hand, by extending the retirement age, greater financial stability would be achieved, which, according to analysts, could reduce the current deficit due to inflation by up to 20-25%.
There are retirees who will earn less in their pensions.
In the years before 1983, the minimum retirement age was 65 years old, but the Social Security Amendment of 1983 extended it to 67 years old starting from those born in 1960.
However, for younger retirees, this could mean that they do not receive the amount that corresponds to them, especially those whose income has been much lower throughout their life. The most precarious jobs have paid less or have depended on other income from Social Security, which would make their retirement benefit smaller, thus, the new retirees would be reduced by 20%, and a reduction of 23% for all beneficiaries, which, like a dog chasing its tail, would lead to raising taxes for workers with higher incomes to be able to cope with this reduction.
Summary on the increase in the retirement age:
| Why is the change being proposed? | To ensure the sustainability of Social Security due to a projected deficit by 2035. |
| What does raising the age to 70 mean? | Longer time in the workforce to receive full benefits. |
| Drawbacks of the proposal | Disadvantages workers with shorter life expectancies. Impacts those with physically demanding jobs or limited savings. |
| Impact on Social Security payments | Reduced monthly payments for early retirement. Shorter time to enjoy benefits if retirement is delayed. |
| Other alternatives | ncrease payroll taxes. Remove income caps on taxable earnings. Reduce benefits for high-income retirees. |
| Expert opinions | Improves system stability. Unfair to vulnerable workers. |
| What do these changes mean for you? | Potential delay in retirement. Need for increased savings. Planning with a financial advisor. |
There is still much to be studied about whether or not raising the retirement age to 70 is a good measure, but what is clear is that the debate is on the table and that there are still many ways to investigate ways to guarantee the prolongation of the country’s financial stability without the need for our elders to continue working almost at square one.