New Retirement Age Proposal Could Affect Millions of Americans , Here’s What It Means for You
New Retirement Age Proposal Could Affect Millions of Americans , Here’s What It Means for You. Many Republicans are taking advantage of the opportunity to voice their opinions about Social Security and its funding deficit as the new Administration takes office. For instance, Republican Congressman Mark Alford of Missouri used his appearance on Fox News to advocate for raising the retirement age in order to reduce the expenses incurred by the federal government.
He described the concepts discussed at a recent discussion with Elon Musk and Vivek Ramaswamy, who will lead Donald Trump’s unofficial Department of Government Efficiency [DOGE] starting in January.
Alford said on Fox “I believe there is a way to move that retirement age back a little bit on the front end, since people are retiring later as they live longer.” He claims that government expenditure must be cut in order to “right the ship” since the “$36 trillion” national debt and interest payments are “unsustainable.” Naturally, those cuts must come from social programs, which Republicans find useless. “It will entail reducing our discretionary spending by 24 percent and taking a long-term view of the front end of certain programs, such as Social Security and Medicare.”
Would raising the retirement age be a positive for Social Security?
The full retirement age was raised from 65 to 67 for those born in 1960 or later, but even if it continues to rise, it is unlikely to be well-liked and may result in lower lifetime benefits for recipients. It wouldn’t solve the present budget issue either.
According to RetireGuide.com’s main financial expert Stephen Kates, increasing the age at which individuals are eligible to receive benefits “is a backward way of simplifying reducing benefits.” When compared to the expected benefits at full retirement age, which is 67 for those born after 1959, he claims that the earliest age at which a person can begin receiving benefits is 62, which often results in a [approximately] 30% reduction in their monthly income. Benefits for future retirees would begin later and be less than they are now if the earliest or full retirement age were raised.
“I do not believe that there is a constituency among the public for raising the retirement age,” said Lisa Whitley, a financial coach and planner at MoneyByLisa, who agreed with the viewpoint but went one step further. In actuality, the majority already receive a “discounted” payment since they make their claims before to reaching full retirement age. The wealth disparity between households with lower and higher incomes will only get worse if the FRA is raised. Furthermore, the goal of a longer life expectancy is not the same as the goal of working longer, even for those who are happy to wait till FRA.
There are other options that would benefit the program more than decreasing the government budget, such as raising or even doing away with the salary cap that is subject to FICA taxes, but no Republican administration would approve the bill because it would tax the wealthy.
In any case, it’s not entirely obvious what the new full retirement age would be, but in a piece for the Heritage Foundation, Rachel Greszler, a senior research scholar at the Roe Institute, proposed 70. Her post claims that it would help alleviate the funding cliff and align with the March 2024 Republican Study Committee budget, which made a similar recommendation.
Republicans do support the plan in large numbers, and Georgia Representative Richard McCormick has also hinted at reduction. “We will have to make some difficult choices. Democrats must be brought in to discuss Medicare, Medicaid, and Social Security. We are capable of saving hundreds of billions of dollars; we simply need to have the fortitude to face the issues head-on.