1983 Congress changed age to 67 for those born in 1960 or later
By Dr. Merrill Matthews
Texas Insider Report: AUSTIN Texas Some want to push back Social Securitys full retirement age which means that more people would have to wait longer to get their full Social Security benefits. The problem with that proposal is that the large majority of seniors sign up for Social Security benefits early
because they need the money.
For decades Social Securitys full retirement age was 65.
In 1983 Congress changed it to age 67 for those born in 1960 or later gradually phasing in the age increase.
The change seemed demographically reasonable. On average Americans live much longer now than they did in 1935 when Congress created Social Security. And those demographic changes continue.
Now some policymakersmostly Republicansare again calling attention to those demographic changes and proposing to push back the full retirement age even furtherusually recommending age 70. Many Democrats by contrast
want to expand Social Security.
Heres the problem with a later retirement date: The large majority of seniors actually take Social Security early before their full retirement age.
According to a recent assessment by U.S. News 48 percent of women and 42 percent of men sign up for Social Security benefits at age 62 the first year people are allowed to start drawing benefits. At that age benefits are about 25 percent less than if seniors waited until their full retirement age.
Another 7 percent to 8 percent sign up at age 63 ditto for age 64.
And now that the
retirement age has increased to 66 on its way to 67 those who sign up at age 65 are actually signing up early.
Thus somewhere between 65 percent and 70 percent of seniors start drawing their retirement benefits before their full retirement age. And while that number is down from nearly 80 percent in the 1990s its still a huge percentage.
The point is that while delaying Social Securitys full retirement age until say 70 may comport with demographic trends it contradicts financial trends. As modest as Social Security payments are millions of seniors need that money to live on.
The best solution to this problem is to transition to a system of personal retirement accounts. Properly structured the vast majority of Americans would approach their retirement years with significant assetsassets that belong to them not the government.
And when people own their own retirement assets who cares when or whether they retire?
Todays PolicyByte was written by Dr. Merrill Matthews resident scholar with the Institute for Policy Innovation.
