The 1983 Social Security Amendments included a phased-in increase in the age of eligibility for collecting full benefits (the Normal Retirement Age) from 65 to age 67, beginning with those born after 1937 and becoming full effective for people born after 1959. In order to improve Social Security's long-term solvency, some propose further changing the age for collecting full benefits. Those proposals range from accelerating the twelve-year hiatus in the current timetable to raising the full retirement age to 70 years old. As a practical matter, however, most people will continue to retire before the Normal Retirement Age. In fact, many retire at age 62. Thus, raising the age represents an across-the-board benefit cut.
Proponents of further increases in the normal retirement age (NRA) argue that age 65 was established when relatively few workers reached that age, that the scheduled increase to 67 is an inadequate response to increased longevity, and that financial gain to the system from increasing the age must be considered. Conversely, many concerns have been raised about the impact a change would have on certain groups of workers. For instance, African American men have below-average life expectancies and thus would be disproportionately hurt by a higher retirement age. In addition, an increase could have a disproportionate impact on women, who tend to rely more heavily on spousal benefits. If the retirement age is increased, the actuarial reduction from early retirement is also increased. This means women whose husbands retire early will receive a lower benefit for life. Finally, the fact that most people are living longer does not necessarily mean they can work longer; those in poor health or in physically demanding jobs would be hard pressed by a higher age. Of equal concern is the existence of age discrimination and lack of job opportunities for older workers.
Current trends affecting older workers suggest that raising the retirement age could exacerbate existing problems in the labor market. Many willing older workers are unable to find employment, and some older workers have physically demanding jobs or health conditions that make continued work difficult. Despite the elimination of mandatory retirement in 1986, age discrimination remains a significant factor in today's work place. Studies show that older workers continue to have the longest spells of involuntary unemployment, and may employers remain reluctant to hire older workers. Also, many employers have policies in place to move out their older workers.
Older workers who may be unable to work longer may find it financially advantageous to file for Social Security disability benefits. However, Social Security's Disability Insurance trust fund already faces a financial shortfall earlier than the Old Age and Survivors Insurance trust fund. This financing concern must be addressed before there is any further expansion in the program. However, we recognize that some older workers, because of a disability, may need to retire before retirement benefits would otherwise be available. These concerns and others should be addressed within the context of overall Social Security reform.
AARP believes we should not increase retirement age further until the effects of current law have been thoroughly analyzed. Any increase in the Normal Retirement Age should be accompanied by policies promoting expanded job opportunities for older workers and incentives that encourage older workers to extend their working careers.
